MNST - Monster Beverage Corporation

Operator: Good afternoon, everyone, and welcome to the Monster Beverage Corporation Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I would like to turn the floor over to Hilton Schlosberg, Chief Executive Officer. Sir, please go ahead. Hilton Schlosberg: Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Hilton Schlosberg, Vice Chairman and Chief Executive Officer. Also on the call are Tom Kelly, our Chief Financial Officer; Emelie Tirre, our Chief Commercial Officer; Rob Gehring, our Chief Growth Officer; Guy Carding, our President of EMEA and OSP; and Mark Astrachan, our Senior VP of Investor Relations and Corporate Development. Mark will now read our cautionary statement. Mark Astrachan: 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 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 February 28, 2025, and quarterly reports on Form 10-Q, 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. I would also like to note that an explanation of the non-GAAP measures, which we refer to as adjusted where applicable, mentioned during the course of this call, is provided in the notes in the condensed consolidated statements of income and other information attached to the earnings release dated November 6, 2025. A copy of this information is also available on our website, www.monsterbevcorp.com, in the Financial Information section. Please note that like last quarter, scanner data, which was previously provided on earnings calls is included in an exhibit filed with our 8-K. We point out that certain market statistics that cover single months or 4-week periods may often be materially influenced positively or negatively by promotions or other trading factors during those periods. I would now like to hand the call over to Hilton Schlosberg. Hilton Schlosberg: Good afternoon, and thank you for joining us. We're pleased to report yet another quarter of strong financial results and cash generation with record quarterly net sales, gross profit dollars, operating income and net income. The percentage growth rates in reported gross profit, operating income, net income and earnings per share, all outpaced our growth rate in net sales. Overall, the global energy drink category remains healthy with robust growth. We believe household penetration continues to increase in the energy drink category, driven by functionality and lifestyle positioning, diverse offerings that appeal to an increasingly broad and loyal consumer base and affordable value offerings in addition to premium offerings. In the United States, according to Nielsen, for the recently reported 13-week period through October 25, 2025, sales in dollars in the energy drink category, including energy shots for all outlets combined, namely convenience, grocery, drug, mass merchandisers, increased by 12.2% versus the same period a year ago. In EMEA, the energy drink category according to Nielsen for our tracked markets for the recently reported 13-week period, which differ from country to country, grew at approximately 13.3% versus the same period last year, ForEx neutral. In APAC, the energy drink category according to Nielsen, Circana and INTAGE for our tracked channels for the recently reported 13-week period, which differ from country to country, grew at approximately 20.0% versus the same period last year, FX neutral. In LatAm, the energy drink category according to Nielsen for our tracked markets for the 3 months ended September 30, 2025, grew at approximately 12.6% versus the same period last year, FX neutral. Our net sales to customers outside the United States rose to approximately 43% of total reported net sales in the 2025 third quarter, the highest percentage recorded by the company for a single quarter. We believe our portfolio of energy drink offerings are well positioned to participate in the growing global energy drink category, appealing to a broad range of consumers across geographies, price points and need states. Innovation continues to be an important contributor to category growth, and we maintain a robust innovation pipeline. Turning to marketing. Our marketing messaging continues to resonate globally as we built strong momentum through the summer with marketing efforts focused on growing the core business and attracting new consumers. Highlights in the third quarter included the continued success of the Monster-sponsored McLaren Formula 1 team, a Monster Energy Lando Norris Zero Sugar product was well received in EMEA and has recently been introduced in Texas, California and the Las Vegas metropolitan area as an LTO, limited time offering with a nationwide launch planned in 2026. The Summer X games in Salt Lake City provided significant brand exposure as Monster Energy was once again the primary sponsor. Other major sponsorships and events during the quarter included the UFC; the Motorcross Finals in Las Vegas; the Monster Energy MotoGP of Catalonia, Spain; and Outside Lands Music Festival in San Francisco, among others. The Ultra brand family continued its strong performance with the introduction of a digital media campaign centered around Zero Sugar, Flavor Unleashed, complementing the viral social media surge of flagship White Ultra Zero together with robust merchandising activity at retail. During the third quarter of 2025, the impact of tariffs on our operating results is modest. In general, while our flavors and concentrates are manufactured both in the U.S. and Ireland at the present time, production of our finished products takes place locally in our respective markets. Despite the modest impact on our business in the third quarter, the tariff landscape continues to be complicated and dynamic. For instance, tariffs significantly impacted the Midwest premium for aluminum, which increased the cost of our aluminum cans. We also import some raw materials into the United States, export certain raw materials for local markets and export limited quantities of finished products. We do not believe, based on our business model that the current tariffs will have a material impact on the company's operating results. However, we expect it will continue to have a modest impact in the fourth quarter of 2025 and in 2026. We will continue to recognize tariffs on aluminum through the higher Midwest premium and continue to implement mitigation strategies across the business where possible. Now turning to our Q3 results. Net sales were $2.2 billion for the 2025 third quarter or 16.8% higher than net sales of $1.88 billion in the 2024 third quarter. Net sales, excluding the Alcohol Brands segment increased 17.5% in the 2025 third quarter. Net changes in foreign currency exchange rates had a favorable impact on net sales for the 2025 third quarter of $31.8 million. Net sales on a foreign currency adjusted basis increased 15.1% in the 2025 third quarter. Net sales, excluding the Alcohol Brands segment on a foreign currency adjusted basis, increased 15.8% in the 2025 third quarter. Excluding the Alcohol Brands segment from our reported results is purely illustrative as it remains part of our ongoing operations. Net sales for the company's Monster Energy Drinks segment increased 17.7% to $2.03 billion for the 2025 third quarter from $1.72 billion for the 2024 third quarter. Net sales on a foreign currency adjusted basis for the Monster Energy Drinks segment increased 16% in the 2025 third quarter. Net sales for the company's Strategic Brands segment increased 15.9% to $130.5 million for the 2025 third quarter from $112.6 million in the 2024 third quarter. Net sales on a foreign currency adjusted basis for the Strategic Brands segment increased 13.2% in the 2025 third quarter. Net sales for the Alcohol Brands segment decreased 17% to $33 million for the 2025 third quarter from $39.8 million in the 2024 third quarter. Gross profit as a percentage of net sales for the 2025 third quarter was 55.7% compared with 53.2% in the 2024 third quarter. The increase in gross profit as a percentage of net sales for the 2025 third quarter was primarily the result of pricing actions, supply chain optimization and product sales mix, partially offset by higher promotional allowances, increased aluminum can costs and geographical sales mix. Distribution expenses for the 2025 third quarter were $82.6 million or 3.8% of net sales compared with $82.7 million or 4.4% of net sales in the 2024 third quarter. Selling expenses for the 2025 third quarter were $214.6 million or 9.8% of net sales compared with $196.1 million or 10.4% of net sales in the 2024 third quarter. General and administrative expenses for the 2025 third quarter were $251.9 million or 11.5% of net sales compared with $241.1 million or 12.8% of net sales for the 2024 third quarter. Stock-based compensation was $32.8 million for the 2025 third quarter compared with $27.5 million in the 2024 third quarter. The increase in stock-based compensation for the 2025 third quarter included $7.4 million related to certain equity awards granted late in the 2025 first quarter that contain a new retirement clause. Operating expenses for the 2025 third quarter were $549.1 million compared with $519.9 million in the 2024 third quarter. Adjusted operating expenses for the 2025 third quarter were $510.4 million compared with $474.7 million in the 2024 third quarter. Operating expenses as a percentage of net sales for the 2025 third quarter were 25.0% compared with 27.6% in the 2024 third quarter. Adjusted operating expenses as a percentage of net sales for the 2025 third quarter were 23.6% compared with 25.8% in the 2024 third quarter. Operating income for the 2025 third quarter increased 40.7% to $675.4 million from $479.9 million in the 2024 comparative quarter. Adjusted operating income for the 2025 third quarter increased 35.6% to $705.8 million from $520.4 million in the 2024 third quarter. The effective tax rate for the 2025 third quarter was 23.9% compared with 21.8% in the 2024 third quarter. The increase in the effective tax rate was primarily attributable to higher income taxes from foreign tax jurisdictions. Net income per diluted share for the 2025 third quarter increased 41.1% to $0.53 from $0.38 in the third quarter of 2024. Adjusted net income per diluted share for the 2025 third quarter increased 36.2% to $0.56 from $0.41 in the third quarter of 2024. And now let's turn to North America. Net sales in the U.S. and Canada in the 2025 third quarter increased by 11.6% in dollars over the same period in 2024. The quarter was driven by strong execution across channels, sustained momentum from prior innovations, continued strength of the Monster Energy Ultra family and a strong contribution from the Juice Monster family. In the U.S., according to Nielsen, for the 13 weeks ended September 27, 2025, our Monster Energy Ultra brand family grew 29% year-over-year, led by our flagship White Zero Ultra and strong repeat purchases of early innovations, including Ultra Blue Hawaiian and Ultra Vice Guava. Our revenue growth management team remains focused on delivering sustainable revenue growth, value creation and strategic trade spend optimization. We implemented pricing adjustments through frontline price increases and/or reductions in promotional allowances by packaging channel in the U.S. effective November 1, 2025. Our pricing strategy considers consumer purchasing behavior, brand momentum, channel and package mix. We continue to anticipate minimal impact on volume, supported by the category's favorable value proposition and the relatively modest pace of energy drink price increases compared to other NART beverages over the past decade. Currently, we are in the process of launching a number of SKUs at retail to take us through 2025. These are Monster Energy Ultra Wild Passion, Juice Monster Bad Apple, Monster Electric Blue, Monster Orange Dreamsicle and in certain markets, Monster Energy Lando Norris Zero Sugar. Our innovation is supported by upgraded analytics for SKU flow, display optimization and cooler resets. Additionally, we have refined our merchandising strategy to prioritize high-impact placements across the convenience, mass and grocery channels. In addition, we have a robust innovation slate planned for 2026. In January, we are planning to launch Monster Energy Strawberry Shot in 16-ounce cans in full and zero sugar offerings. And in February, we are planning to launch Juice Monster Voodoo Grape, Reign, Watermelon Sour Gummy and Bang Lime Pop Drop. We are planning to introduce Monster Energy Lando Norris Zero Sugar on a nationwide basis. Late in the first quarter, we are planning to launch FLRT in select channels. FLRT is a female-focused brand with 4 initial flavors, Strawberry Fling, Guava Lava, Berry Tempting and Sunset Squeeze and contains Zero Sugar and includes ingredients we believe will appeal to our target audience. We are also planning to launch Monster Energy Ultra Punk Punch in March. In April, we are planning to launch Full Throttle Red Apple and NOS Grand Prix Guava. Additionally, we are planning to launch Storm Energy in the second quarter of 2026 in the Wellness Zero Sugar energy drink segment. We're also planning to introduce 2 LTOs, that's limited time offers from May to July 2026, Monster Energy Ultra Red, White and Blue Razz and Juice Monster Strawberry Lemonade to coincide with America's 250th anniversary. Turning to sales internationally. Net sales to customers outside the United States increased 23.3% to $937.1 million or a record of approximately 43% of total net sales in the 2025 third quarter compared to $760.1 million or approximately 40% of total net sales in the corresponding quarter in 2024. Net sales to customers outside the United States on a foreign currency adjusted basis increased 19.1% to $905.3 million in the 2025 third quarter. Gross profit as a percentage of net sales increased in all 3 of our international regions, EMEA, Asia Pacific and Latin America in the 2025 third quarter as compared to the 2024 third quarter. Now focusing on EMEA. Our net sales in EMEA in the 2025 third quarter increased by 30.3% in dollars and increased 23.0% on a currency-neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales for the 2025 third quarter was 37.0% versus 35.4% in the same period in 2024. The quarter was driven by strong execution across markets, including accelerated cooler placements and space gains. Sales growth reflects contributions from both existing SKUs and 2025 innovation with growth from all brand families, especially the Monster Energy Ultra and Juice Monster families. Energy drink category growth remains healthy with Monster outperforming the category in the majority of EMEA markets. According to Nielsen, in all measured channels in Coca-Cola EuroPacific Partners Western European markets, the Monster Energy brand was the fastest-growing FMCG brand by value and value growth year-to-date. According to Nielsen, for the most recent 13-week period, the Monster brand is now the #1 energy drink in Greece, adding to our market leadership in a number of other countries. Our affordable brands continue to grow and gain share in their respective markets. Within EMEA, we are seeing continued strong growth of Predator Fury in Egypt, Kenya and Nigeria and are continuing the rollout of Predator in Morocco. We are the market leader in Kenya. Innovation continues to drive performance in this region, in particular, Monster Energy Lando Norris Zero Sugar, which is now available in 27 EMEA markets, became the company's most successful new product launch in EMEA. In the third quarter, we launched Monster Energy Valentino Rossi Zero Sugar in 12 markets and Monster Ultra Vice Guava in Australia, with both products showing promising initial results. We will also continue the rollout of various Monster Energy strategic brands and affordable brand innovations in additional markets in EMEA throughout the last quarter of the year. Turning to Asia Pacific. Net sales in Asia Pacific in the 2025 third quarter increased 28.7% in dollars and 26.9% on a currency-neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales for the 2025 third quarter was 40.7% versus 40.2% in the same period in 2024. Net sales in Japan in the 2025 third quarter increased 15.6% in dollars and increased 9.7% on a currency-neutral basis. We launched 2 SKUs of Reign Storm in Japan in the 2025 third quarter. Net sales in South Korea in the 2025 third quarter increased 23.9% in dollars and increased 23.6% on a currency-neutral basis as compared to the same quarter in 2024. Net sales in China in the 2025 third quarter increased 42.9% in dollars and increased 42.0% on a currency-neutral basis as compared to the same quarter in 2024. Net sales in India in the 2025 third quarter increased 54.5% in dollars and increased 58.6% on a currency-neutral basis as compared to the same quarter in 2024. We continue to remain optimistic about the long-term prospects for our brands in Asia Pacific and the expansion of our affordable brands in China and India. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 56.9% in dollars and increased 60.2% on a currency-neutral basis. Turning now to Latin America and the Caribbean. Net sales in Latin America, including Mexico and the Caribbean in the 2025 third quarter increased 9.3% in dollars and increased 9.8% on a currency-neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales was 46.8% for the 2025 third quarter versus 42.2% in the 2024 third quarter. Net sales in Brazil in the third quarter increased 11.3% in dollars and increased 10.4% on a currency-neutral basis. We launched Juice Monster Rio Punch in the third quarter with positive market acceptance. Net sales in Mexico increased 26.8% in dollars and increased 30.1% on a currency-neutral basis in the 2025 third quarter. We launched Monster Energy Ultra Strawberry Dreams and Predator Wild Berry in the quarter and both contributed to growth and market share gains. As you may be aware, Mexico recently approved new excise taxes on sugar and artificially sweetened drinks effective January 2026, which will apply to drinks in our portfolio. While Mexico accounts for a low single-digit percentage of our sales, we will work to reduce the impact on our business where possible. Net sales in Chile in the 2025 third quarter increased 6% in dollars and 8.1% on a currency-neutral basis. Net sales in Argentina in 2025 third quarter decreased 15.1% in dollars and 15.0% on a currency-neutral basis. The net sales decrease in Argentina was due to lower price per case revenues as a result of a change in our operating model late in the first quarter of 2025 with the objective of better managing our foreign currency exposure. Our volumes in Argentina actually increased in the quarter. Turning to Monster Brewing. Net sales for the Alcohol Brands segment were $33 million in the 2025 third quarter, a decrease of approximately $6.8 million or 17% lower than the 2024 comparable quarter. Our recently launched hard lemonade lines, Blind Lemon and Blind Lemon began shipping nationally in July. Our first subline of The Beast, a spirit-based RTD, ready-to-drink and 2 new beer brands among the planned innovations in 2026. During the 2025 third quarter, no shares of the company's common stock were repurchased against our repurchase program. As of November 5, 2025, approximately $500 million remained available for repurchase under the previously authorized repurchase program. Turning now to October 2025 sales. We estimate that October 2025 sales on a non-foreign currency adjusted basis were approximately 14.1% higher than the comparable October 2024 sales and 14.5% higher on a non-foreign currency adjusted basis, excluding the Alcohol Brands segment. We estimate that on a foreign currency adjusted basis, October 2025 sales were approximately 13% higher than the comparable October 2024 sales and 13.4% higher on a foreign currency adjusted basis, excluding the Alcohol Brand segment. October 2025 had the same number of selling days as October 2024. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week finish holidays fall, timing of new product launches, the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some cases, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I'd like to summarize some recent positive points. Our record quarterly net sales, gross profit dollars, operating income and net income speak to the strength of our brands. In addition, the percentage growth rates in reported gross profit, operating income, net income and earnings per share, all outpaced our growth rates in net sales. The energy drink category continues to grow globally. We believe that household penetration continues to increase in the energy drink category, growth opportunities in household penetration per capita consumption, along with consumers' needs for energy are positive factors for the category. We continue to expand our sales in non-Nielsen tracked channels. Globally, as measured by scanner data, consumer demand remains strong in the energy drink category. We continue to review opportunities for price increases, both domestically and internationally. We continue to invest in our supply chain to better service our customers and improve our cost structure. We are excited about our innovation pipeline for 2026 and beyond. Finally, we are hosting an Investor Day in New York City on December 2, and we hope you can join us in person or online. I would now like to open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] And our first question today comes from Dara Mohsenian from Morgan Stanley. Dara Mohsenian: So I just wanted to touch on EMEA revenue growth, strong reported results in the last couple of quarters. We're also seeing really robust retail takeaway in Nielsen and Western Europe in what's countries that are more developed with higher per capita consumption. So just want to get your perspective on what's driving the strong category growth in Western Europe, perhaps compare and contrast that with the U.S. category acceleration we've seen over the last year? And the second part of that strength in EMEA is Monster's market share has accelerated in the last couple of quarters here. So I know Hilton touched on some of the factors in the prepared remarks, but perhaps just give us a bit more detail on what's also driving the Monster share acceleration in EMEA? Hilton Schlosberg: Sure, Dara. That's a long question, but I'll do my best to answer it. Category acceleration in Europe, fundamentally driven by strong value proposition that we have with energy products compared to other NARTDs, combined with brand image, image is really important in our industry and category functionality, which all combine to make energy drinks all-day multi-occasion beverages with a wide appeal across age groups. We've also had this ultra-wide viral social media growth through the Internet and following that a lot of endorsements. And for those of you who haven't followed that on social media, it's something really worth seeing. A large percentage of our category consumers, we've heard about 25%. We did some studies in Western Europe based on usage and attitude. And we basically have heard from these studies that 25% of consumers are actually new to the category in the last 12 months and come from a range of other categories, including water, juice, coffee and sparkling soft drinks. We have not done the study in the U.S., just in Europe to be precise. The energy category has a wide range of product offerings, both sugar, non-sugar SKUs with an extensive range of flavors and material product innovations and innovations. Similar to the U.S., value proposition, brand image, functionality, consumers new to the category come from a range of other categories, water, coffee, coffee house, coffees are becoming really expensive and energy drinks are seen as a more affordable alternative. We've got zero and we've got full sugar variants and as you know, a wide variety of innovation. And if we talk about share gains, that was another part of your question. Mark just sent me a note and said I didn't answer your question properly. I have to talk about share gains. So Monster outperformed the category, and you could see the share gains in the attachment to the release, which we're pretty excited about. The achievement in EMEA in market share was pretty phenomenal. So again, we outperformed the category with growth driven both from innovation and from existing SKUs, which are consumer favorites. And that's really important about our business is that growth is driven by innovation as well as from existing SKUs, whereas if you look at the rest of the category, they are mainly dependent on innovation for growth. Ultra, the Ultra brand platform has led the growth with Ultra White supported online, as I mentioned, and social media consumer endorsements together with really good Ultra innovation. Growth in the Monster SKUs has Monster Green. Juice Monster has added to the positioning in Europe and Lando Norris Zero Sugar, you add that all together, that combined to drive growth ahead of the category. Lando Norris was, as I mentioned in the script, one of the best launches we've ever had in EMEA. And we've had some good results in the U.S. as well in the limited markets where we have released Lando Norris Zero Sugar. So sorry, I was a little bit long-winded, but I hope that answered your question. Mark seems to be happy. So... Operator: Our next question comes from Peter Grom from UBS. Peter Grom: Hilton, I was hoping to just get your perspective on the top line trajectory from here, but more from a category standpoint. Obviously, this year has been solid, probably better than most of us would have expected if you asked us this time last year. So just -- as we look out to '26 and just given the various cross currents and tougher comps, how do you see category growth evolving as we look ahead? Would you expect some moderation? Or do you think the strong level of growth can continue? And then just quickly more of a housekeeping. The quarter-to-date number, sometimes there can be a shift in ordering patterns around pricing adjustments. So just curious if there was any sort of benefit from that in the October number? Hilton Schlosberg: Okay. So we did not see a benefit in this quarter from the price increase that -- we will talk about if anyone asked a question that is effective November 1 and including October. So we do not see any impact in the quarter and in October either. So just looking at the key drivers of growth, and then we can talk about your question for 2026. But again, we don't give guidance. But as I talk through what I believe are the key drivers for the category and for growth, we can get a feel -- or you can get a feel of what could happen in 2026. Number one, we spoke about the value proposition relative to other beverages, relative to coffee house coffees. So that's something that I believe is really important in the growth that we are seeing. We're seeing increasing household penetration. We're seeing new entrants into the category. Monster has always stood for image. Image is really important and image is really important in the energy drink category. We've spoken about innovation, the need state for energy. There's a huge -- everyone wants energy. They need energy, and we offer that. The fact that we are an affordable luxury, which we've spoken in the past and also this whole sort of move behind the Ultra brand family. And energy drinks are becoming more acceptable in society. At one time, they were kind of looked at and people were concerned about them. But now understanding the levels of caffeine, which are not exorbitant and less than half of equivalent size of a coffee house coffee, energy drinks are becoming more acceptable. And then when we look at 2026, we can make our own conclusions, but we are having a price increase that we'll talk about maybe. And innovation, we've got a lot of innovation planned for the remainder of this year that's happening. It's all in market, and we've got great innovation for 2026 as well. And we're excited about all the innovation, including these LTOs for America's 250th year anniversary. Operator: Our next question comes from Matthew Smith from Stifel. Matthew Smith: Since you mentioned pricing, I'll swap my question in here. You have pricing effective November 1. It sounds like you're taking a strategic approach versus a broad line increase. In the U.S., what level of pricing do you expect from the increases in promo reductions? And do you expect price realization to be significantly different by channel? Hilton Schlosberg: Okay. So let me start off by saying we've completed our discussions with our bottlers and our customers. And we will have revised pricing implemented effective November 1, which is already happening. As I also said on the call, we anticipate minimal impact on volumes, reflecting the energy drink category's favorable value proposition and relatively modest pace of price increases compared to other NARTD categories. And now I'm just going to hand this question over to Rob Gehring, who has been our Chief Growth Officer, as most of you will know, who's been intimately involved in implementing the price increasing and the -- it's better you hear it from him rather than from me. So Rob, please go ahead. Rob Gehring: You bet. Matt, thanks for the question. I appreciate that. As you're aware, we believe RGM is a balance of art and science rooted in consumer insights where we sequentially strive to grow top line faster than units. And as Hilton mentioned, we remain focused on unit growth, and we're constantly evaluating elasticities because we believe that's a critical strategic consumption metric. So as we engage with our bottlers and our retailers, we strive to optimize the ideal balance of rate, trade spend, package mix and channel mix. And what we have implemented effective November 1, you will start to see in the coming weeks in scanner data, but our goal is to consistently achieve and deliver those objectives. Operator: Our next question comes from Bonnie Herzog from Goldman Sachs. Bonnie Herzog: All right. Actually, if I could, Rob, maybe just ask a quick follow-up question on pricing about the net price realization you're hoping to achieve with the actions you just talked about. How do we think about it versus, I guess, the 5% rate or price increase you took last year? Rob Gehring: I think, Bonnie, thanks for the question, and thanks for the follow-up. We're going to go into a lot more detail about our strategy in December. But at this point, the complexity across channels and package mix and across our brand families, it's a little early to state an exact precise number as we watch this materialize. You're starting to see it in stores now. You'll see in scanner data in coming weeks. But again, our goal is always to manage that balance between delivering that top line ahead of unit growth. So you can see how effective it was for us in 2025, and our goal is to consistently deliver that moving forward. Bonnie Herzog: Okay. And then if I could, Hilton, I'd love to ask you a question about your gross margins in the quarter, which were really strong. And I think they came in better than you expected since I believe you suggested to us last quarter that they would decline sequentially. So just would love to hear from your perspective, like, I guess, what came in better than you thought? I mean, was it stronger volume, you got more leverage, et cetera? Hilton Schlosberg: So what we said in the release, and I think that's quite important to look at that. So we had pricing actions, which were positive. Our supply chain optimization was again positive, and we had product sales mix. And that's -- as we move from more sugar beverages to lower -- to zero sugar alternatives, that benefits our margin. And then in the quarter, we also had higher promotional allowances, increased aluminum can costs, which we've discussed and geographical sales mix. So you put it all together, pricing was good, increase in pricing, supply chain optimization and product sales mix, and they were the major contributors to gross margin. Now gross margin was the same as last quarter, which was really pleasing to see. And we're really happy with where we are now. We spoke a little bit about tariffs in the script and that we will see an impact in tariffs. Tariffs, we spoke about another -- a modest impact in this quarter. We saw -- we spoke about a modest impact of tariffs in the fourth quarter and the first quarter of 2026. And then as we -- if things stay very much the same, we'll then be benefiting from what happened in 2025 because that's when the Midwest premium and the LME started moving on. And then, of course, we'll have the benefit of pricing, which Rob has just spoken about and which has been implemented effective November 1. Operator: And our next question comes from Kaumil Gajrawala from Jefferies. Kaumil Gajrawala: Well done this quarter. A question on the contribution of affordable energy around the world and its sort of impact on margins. The long history has been margins of international have been lower than the U.S. Now with the launch of affordable energy and given the margin profile, is that the sort of gap that -- is that the sort of product that can maybe narrow that gap in margins of international versus the U.S.? Or is it perhaps just not big enough at this stage to help bridge that? Hilton Schlosberg: Yes. One of the problems internationally, as I've spoken on many occasions is that the pricing internationally is not the same pricing that we're able to achieve in the U.S. and that we look at some of our competitors, and we have to -- as we compete in a market, we have to price ourselves competitively. And we found that if we stray more than a certain percentage from a large competitor, it does impact volumes. So we have to be very careful with pricing internationally. Plus in most countries, our costs are a lot higher because in the U.S., we have significant scale. So now turning to affordable energy. I think affordable energy, because it's a concentrate will actually benefit overall margins internationally, but not to a significant degree, I would believe, but it will be a positive contribution because it's a concentrate model. And as you know, concentrated models really generate higher margins than finished good models, which we run on with our Monster brands. Operator: And ladies and gentlemen, with that, we will be concluding our question-and-answer session for this afternoon. I'd like to turn the floor back over to Hilton Schlosberg for any closing comments. Hilton Schlosberg: Thank you. On behalf of Monster, I would like to thank everyone for their interest in the company. We are confident in the strength of our brands and the talent of our entire Monster family throughout the world, and I'm excited to be working with them all and thank them for their contributions during the quarter. We believe in the company and our growth strategy and are committed to innovating, developing and differentiating our brands and expanding the company both at home and abroad. We are proud of our relationship with the Coca-Cola system and the opportunities this presents to us. We believe that we are well positioned in the beverage industry and are optimistic about the future of our company. Thank you so much for your attendance. Operator: And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.

Operator: Good day, and welcome to the Monster Beverage Company's Second Quarter 2025 Conference Call. [Operator Instructions] Please also note today's event is being recorded. I would now like to turn the conference over to Hilton Schlosberg, Chief Executive Officer. Please go ahead. Hilton H. Schlosberg: Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Hilton Schlosberg, Vice Chairman and Chief Executive Officer. Also on the call are Tom Kelly, our Chief Financial Officer; Emelie Tirre, our Chief Commercial Officer; Rob Gehring, our Chief Growth Officer; Guy Carling our President of EMEA and Oceania, South Pacific; and Mark Astrachan, our Senior VP of Investor Relations and Corporate Development. Mark will now read our cautionary statement. Mark Astrachan: 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 are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial preference 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 February 28, 2025, and quarterly report on Form 10-Q 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. I would also like to note that an explanation of the non-GAAP measures which may be mentioned during the course of this call, is provided in the notes in the condensed consolidated statements of income and other information attached to the earnings release dated August 7, 2025. A copy of this information is also available on our website, www.monsterbevcorp.com in the Financial Information section. Please also note that scanner data, which was previously provided on earnings calls is now included in an exhibit filed with our 8-K. We point out that certain market statistics that cover single months or 4-week periods may often be materially influenced positively or negatively by promotions or other trading factors during those periods. I would now like to hand the call over to Hilton Schlosberg. Hilton H. Schlosberg: Good afternoon, and thank you for joining us. We are pleased to report yet another quarter of strong financial results and cash generation. In fact, our second quarter net sales of $2.11 billion are a quarterly record that crossed the $2 billion threshold for the first time in the company's history, with net sales increasing 11.1% compared with the 2024 second quarter. In addition, the percentage growth rates in reported gross profit, operating income, net income, and earnings per share all outpaced our growth rate in net sales. Overall, the global energy drink category remains healthy with accelerating growth. Household penetration continues to increase in the energy drink category, driven by product functionality and lifestyle positioning, diverse offerings that appeal to an increasingly broad and loyal consumer base and affordable value offerings in addition to premium offerings. In the United States, according to Nielsen, for the recently reported 30-week period through July 26, 2025 sales in dollars in the energy drink category, including energy shots, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, increased by 13.2% versus the same period a year ago. Trends in our U.S. business remains solid with continued acceleration from early 2025. In EMEA, the energy drink category according to Nielsen for our tracked markets for the recently reported 30-week period, which differ from country to country, grew at approximately 15.4% versus the same period last year, FX neutral. In APAC, the energy drink category according to Nielsen, Circana and INTAGE for our tracked channels for the recently reported 30- week period which differ from country to country, grew at approximately 20.9% versus the same period last year, FX neutral. In LATAM, the energy game category according to Nielsen for our track markets for the 3 months ended June 30, 2025, grew at approximately 13.9% versus the same period last year. Growth remains healthy in local currencies across EMEA, Asia Pacific and Latin America. Our net sales to customers outside the United States rose to approximately 41% of total reported net sales in the 2025 second quarter. We believe our portfolio of energy drink offerings are well positioned to participate in the growing global energy drink category, appealing to a broad range of consumers across geographies, price points and need states. Innovation continues to be an important contributor to category growth but we maintain a robust innovation pipeline. Our marketing messaging continues to resonate globally. Highlights from the second quarter include the continued successes of our sponsorship and endorsement activities, including our McLaren Formula 1 team sponsorship, UFC and MMA Summer X Games, Supercross and Motocross and Stagecoach music festival, among others. Relatedly, we successfully introduced Monster Energy Lando Norris Zero Sugar in select EMEA markets in the second quarter with a broader introduction planned for the second half of the year. As an aside, the McLaren Formula 1 team won again this past weekend. Building on the successes of our $1 billion Ultra brand family, we've introduced a new visual brand identity to differentiate and enhance visibility in store. In particular, we have established new merchandising platforms, including in-store coolers around a Zero Sugar flavors unleased proposition. This will be followed by digital media campaign in the third quarter adding to the most recent viral explosion on social media for our flagship Zero Ultra energy drink. We also have further Ultra innovations planned, including the launch of Ultra Wild Passion in the fourth quarter. During the second quarter of 2025, the impact of tariffs on our operating results was immaterial. In general, while our flavors and concentrates are manufactured both in the U.S. and Ireland at the present time, production of our finished products takes place locally in our respective markets. Despite the immaterial impact on our business in the second quarter, the tariff landscape continues to be complicated and dynamic. We import some raw materials into the United States, export certain raw materials for local markets and export limited quantities of finished products. We do not believe, based on our business model that the current tariffs will have a material impact on the company's operating results. However, we expect it will have a modest impact in the third quarter of 2025. We will continue to recognize tariffs on aluminum through the higher Midwest premium and continue to implement mitigation strategies across the business where possible. Turning to our Q2 2025 results. Net sales were $2.11 billion for the 2025 second quarter or 11.1% higher than net sales of $1.9 billion in the comparable 2024 second quarter. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2025 second quarter of $5 million. Net sales on a foreign currency adjusted basis increased 11.4% in the 2025 second quarter. Net sales, excluding the Alcohol Brands segment on a foreign currency adjusted basis increased 11.8% in the 2025 second quarter. Excluding the Alcohol Brands segment from our reported results is purely illustrative as it remains part of ongoing operations. Net sales for the company's Monster Energy Drinks segment increased 11.2% to $1.94 billion for the 2025 second quarter from $1.74 billion for the 2024 2nd quarter. Net sales on a foreign currency adjusted basis for the Monster Energy Drinks segment increased 11.4% in the 2025 second quarter. Net sales for the company's Strategic Brands segment increased 18.9% to $129.9 million for the 2025 second quarter from $109.2 in the 2024 second quarter. Net sales on a foreign currency adjusted basis for the Strategic Brands segment increased 19.1% in the 2025 second quarter. Net sales for the Alcohol Brands segment decreased 8.6% to $38 million for the 2025 second quarter from $41.6 million in the 2024 second quarter. Gross profit as a percentage of net sales for the 2025 second quarter was 55.7% compared with 53.6% in the 2024 second quarter. The increase in gross profit as a percentage of net sales for the 2025 second quarter was primarily the result of pricing actions, supply chain optimization and lower input costs, partially offset by geographical sales mix and higher promotional allowances. Distribution expenses for the 2025 second quarter were $82 million or 3.9% of net sales compared with $87.4 million or 4.6% of net sales in the 2024 second quarter. Selling expenses for the 2025 second quarter were $196.9 million or 9.3% of net sales compared with $192.1 million or 10.1% of net sales in the 2024 second quarter. General and administrative expenses for the 2025 second quarter were $265.9 million or 12.6% of net sales compared with $212.8 million or 11.2% of net sales for the 2024 second quarter. Stock-based compensation was $33.2 million for the 2025 second quarter compared with $18.8 million in the 2024 second quarter. The increase in stock-based compensation for the 2025 second quarter included $7.9 million related to certain equity awards granted late in the 2025 first quarter that contained a new retirement clause. In addition, general and administrative expenses for the 2025 second quarter included $13.8 million of litigation provisions. Operating expenses for the 2025 second quarter were $544.8 million compared with $492.3 million in the 2024 second quarter. Adjusted operating expenses exclusive of the Alcohol Brands segment, the litigation provisions and the change in stock-based compensation for the 2025 second quarter were $497.7 million compared with $459.3 million in the 2024 second quarter. Operating expenses as a percentage of net sales for the 2025 second quarter were 25.8% compared with 25.9% in the 2024 second quarter. Adjusted operating expenses as a percentage of net sales for the 2025 second quarter were 24.0%. Operating income for the 2025 second quarter increased 19.8% to $631.6 million from $527.2 million in the 2024 comparative quarter. Adjusted operating income for the 2025 second quarter, exclusive of the Alcohol Brands segment, the litigation provisions and the change in stock-based compensation increased 21.5% to $667.9 million from $549.7 million in the 2024 second quarter. The effective tax rate for the 2025 second quarter was 24.4% compared with 22.9% in the 2024 second quarter. The increase in the effective tax rate was primarily attributable to higher income taxes in foreign tax jurisdictions. Net income for the 2025 second quarter increased 14.9% to $488.8 million from $425.4 million in the 2024 second quarter. Net income for the 2025 second quarter, exclusive of the Alcohol Brands segment, the litigation provisions and the change in stock-based compensation increased 16.7% to $516.5 million from $442.7 million in the 2024 second quarter. Net income per diluted share for the 2025 second quarter increased 21.1% to $0.50 from $0.41 in the second quarter 2024. Net income per diluted share for the 2025 second quarter, exclusive of the litigation provisions and the accelerated stock-based compensation increased 25.2% to $0.51 from $0.41 in the second quarter of 2024. Net income per diluted share for the 2025 second quarter, exclusive of the Alcohol Brands segment, the litigation provisions and the accelerated stock-based compensation increased 23.0% to $0.52 from $0.43 in the second quarter of 2024. Turning now to the U.S. and North America sales. Net sales in the U.S. and Canada in the 2025 second quarter increased by 8.6% in dollars over the same period in 2024. Growth for the quarter was led by the Monster Energy Ultra family. In the United States, according to the Nielsen reports for the 30 weeks ended July 19, 2025, the Monster Energy Ultra Family was the third largest stand-alone energy drink brand in dollar sales in the energy drink category after Red Bull and Monster for all outlets combined, namely convenience, grocery, drug and mass merchandisers, including energy shots. Innovation continues to drive performance with Monster Energy Ultra Blue Hawaiian and Monster Energy Ultra Vice Guava contributing to the Monster Energy Ultra brand family growth. Our 2 Monster Killer Brew SKUs and Juice Monster Viking Berry also contributed to U.S. growth. Our revenue growth management team remains focused on long-term value creation opportunities and trade spend optimization. The pricing of energy drinks in the United States has increased at a slower rate than other NARTD beverages in the last decade, and we believe this provides for a favorable value proposition with consumers. To that end, we have initiated discussions with our bottlers and customers and are planning for selective price adjustments by packaging channel as well as reductions in promotional allowances in the United States effective during the 2025 fourth quarter. As communicated at our annual meeting, we're planning to launch 2 new Full Sugar Monster Energy flavors, Monster Energy Electric Blue and Monster Energy Orange Dreamsicle in the fall. We are also planning to introduce Juiced Monster Bad Apple, which was introduced in select EMEA markets in 2024 as well as Monster Energy Ultra Wild Passion in the fall. Additionally, we are planning a strategic launch Monster Energy Lando Norris Zero Sugar in Texas and Nevada in California leveraging the Formula 1 races in the United States later this year. Turning to sales internationally. Net sales to customers outside the United States on a foreign currency adjusted basis, increased 16.5% to $869.3 million in the 2025 second quarter. Reported net sales to customers outside the United States were $864.2 million, 41% of total net sales in the 2025 second quarter compared to $746 million or 39% of total net sales in the corresponding quarter in 2024. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars of approximately $5 million in the 2025 second quarter. Turning to EMEA. Our net sales in EMEA in the 2025 second quarter increased by 26.8% in dollars and increased 23.7% on a currency-neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales for the 2025 second quarter was 36.1% versus 34.7% in the same period in 2024. Energy drink category growth remains healthy with Monster outperforming the category in many EMEA markets. According to Nielsen, in all measured channels in Western Europe, excluding Iceland, the Monster Energy brand is now the seventh largest FMCG brand by value. According to Nielsen, for the most recent 13-week period, the Monster brand is now the #1 energy drink in Norway. Our affordable brands continue to grow, gain share in their respective markets. Within EMEA, we are also seeing growth of Fury in Egypt and Predator in Kenya and Nigeria. Innovation continues to drive performance in the region with Juice Monster Rio Punch and Monster Energy Ultra Strawberry Dreams, contributing to the growth in the quarter. In addition, we launched Monster Energy Lando Norris Zero Sugar in 5 markets at the end of the second quarter. We will continue its roll out throughout the second half of 2025 in 33 additional markets in EMEA. We're especially excited about the launch of this product due to its unique package design, appealing melon [ user ] flavor and strong activation by our sales teams and our Coca-Cola bottling partners. We will be launching various Monster Energy strategic brands and affordable brand products in additional markets in EMEA throughout the rest of 2025, including the rollout of Monster Energy Valentino Rossi Zero Sugar in a number of countries. Turning to Asia Pacific. Net sales in Asia Pacific in the 2025 second quarter increased 11.6%, both in dollars and on a currency- neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales for the 2025 second quarter was 41.0% versus 45.4% in the same period in 2024. The decrease in gross profit margins as a percentage of net sales was primarily the result of higher promotional allowances and geographic sales mix. Net sales in Japan in the 2025 second quarter increased 6.1% in dollars and increased 1% on a currency-neutral basis. We are planning to launch 2 SKUs of Reign Storm in Japan in the 2025 third quarter. Net sales in South Korea in the 2025 second quarter increased 22.4% in dollars and increased 28.9% on a currency-neutral basis as compared to the same quarter in 2024. Net sales in China in the 2025 second quarter increased 19.5% in dollars and increased 20.2% on a currency-neutral basis as compared to the same quarter in 2024. Net sales in India in the 2025 second quarter increased 12.4% in dollars and increased 16.0% on a currency-neutral basis as compared to the same quarter in 2024. During the second quarter, sales growth of the Monster Energy brand remained solid with Predator growing meaningfully ahead of the energy drink category in part reflecting its ongoing rollout into new markets and increased production capacity with the Coca-Cola bottlers in India. Overall, we remain optimistic about the long-term prospects for our brands in Asia Pacific and are excited about the incremental expansion of our affordable brands in China and India. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 8.3% in dollars and increased 11.9% on a currency-neutral basis. Turning to Latin America and the Caribbean. Net sales in Latin America, including Mexico and the Caribbean, in the 2025 second quarter decreased 7.8% in dollars and increased 1.7% on a currency-neutral basis over the same period in 2024. Slower growth in the region on a currency-neutral basis was primarily attributable to a change to the operating model in Argentina, lower net sales in certain countries primarily due to production challenges and adverse weather in the region, particularly in Brazil. Gross profit in this region as a percentage of net sales was 45.2% for the 2025 second quarter versus 45.8% in the 2024 second quarter. Net sales in Brazil in the second quarter decreased 1.3% in dollars but increased 10.4% on a currency-neutral basis. We are planning to launch Juice Monster Rio Punch in the 2025 third quarter. Net sales in Chile in the 2025 second quarter increased 4.6% in dollars and 4.2% on a currency-neutral basis. We are planning to launch Juice Monster Pipeline Punch in the 2025 third quarter. Net sales in Argentina in the 2025 second quarter decreased 33.9% in dollars and 30.2% on a currency-neutral basis. The net sales decrease in Argentina was partially due to lower per case revenues as a result of a change to operating model late in the first quarter of 2025 with the objective to better manage our foreign currency exposure. Net sales in Mexico decreased 7.0% in dollars and increased 10.8% on a currency-neutral basis in the 2025 second quarter. In the third quarter, we are planning to launch Monster Energy Ultra Strawberry Dreams and Predator Wild Berry. Turning to Monster Brewing. Monster Brewing results improved relative to the first quarter of 2025 but continue to face challenges in the second quarter. During the 2025 second quarter, we reduced headcount as part of our cost reduction plans. Net sales for the Alcohol Brands segment were $38 million in the 2025 second quarter, a decrease of approximately $3.6 million or 8.6% lower than the 2024 comparable quarter. We continue to plan for the launch of The Beast in certain international markets, subject to regulatory approvals. We are also planning further innovation in Monster Brewing in the coming months for example, a new Hard Lemonade lines, Blind lemon and [ Blinder Lemon ] began shipping nationally in July. During the 2025 second quarter, no shares of the company's common stock were repurchased as of August 6, 2025, approximately $500 million remained available for repurchase under the previously authorized repurchase program. Now turning to our July 2025 sales. We estimate that July 2025 sales on a non-foreign currency adjusted basis, were approximately 24.3% higher than the comparable July 2024 sales and 24.9% higher on a non-foreign currency adjusted basis, excluding the Alcohol Brands segment. We estimate that on a foreign currency adjusted basis, July 2025 sales were approximately 22.2% higher than the comparable July 2024 sales and 22.8% higher on a foreign currency adjusted basis, excluding the Alcohol Brands segment. July 2025 had the same number of selling days as July 2024. In this regard, we caution again that sales over a short period, often is proportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches, the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements which they may alter from time to time for their own business reasons. We iterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. Our record quarterly net sales crossed the $2 billion threshold for the first time in the company's history. In addition, the percentage growth rates in reported gross profit, operating income, net income and earnings per share all outpaced our growth rate in net sales. The energy drink category continues to grow globally. We believe that household penetration continues to increase in the energy drink category growth opportunities in household penetration per capita consumption, along with consumers' needs for energy of positive factors for the category. We continue to expand ourselves in non-Nielsen-tracked channels. Globally, as measured by scanner data, consumer demand remained strong. In the United States, the energy drink category, as measured by Nielsen, accelerated in the 2025 second quarter compared to the 2025 first quarter with growth remaining strong in July. Monster sales at retail have followed a similar some trend. We continue to review opportunities for price increases domestically and internationally. We are excited for our innovation pipeline for 2025 and beyond. I would now like to open the floor to questions about the quarter. Operator: [Operator Instructions] Today's first question comes from Dara Mohsenian with Morgan Stanley. Dara Warren Mohsenian: The gross margin performance was particularly strong in Q2. Can you just talk about how sustainable some of those drivers might be going forward? You mentioned some modest tariff pressure going forward. So just any thoughts around higher aluminum costs and the impact going forward? And if you could just clarify, you mentioned some U.S. pricing in Q4. Is that more selective tactical adjustments? Or are you looking more to a broad type of price increase? Hilton H. Schlosberg: Well, I think we mentioned that the price increase that is currently being explored will depend on packaging channel, so it's still a little premature to say exactly where it will fall out, but we are in discussions with our bottlers and customers. So turning to gross margins. I'm always been very passionate about gross margins and where the gross margins can end up in the company. But as we look at where we are in Q2 and we look forward into Q3 and we don't give guidance. So I've got to be careful what I say otherwise. I might get into trouble here with the lawyers. But we do see some modest pressures coming from tariffs in Q3. And in Q4, if the price increase has not materialized, but we think it will. We will see some reduction in -- through tariffs. But we do believe that the price increase will go some way towards overcoming that. And as I mentioned previously on many calls that we have a hedging strategy in place, so we are not totally exposed to the vicissitudes and changes in pricing in the LME but we are hedged to a limited extent in the Midwest premium which is where we'll see the impact of the tariffs. Operator: And our next question today comes from Bonnie Herzog with Goldman Sachs. Bonnie Lee Herzog: Maybe a quick follow-up. Question on that just in terms of your supply chain optimization efforts because Hilton, I know you've been working on that. So if you have any color that you can share with us and sort of where you're at in that process? And then I'd love to hear some color on the category because it's been very strong recently, especially in the U.S., up double digits. So if you could touch on some of the drivers of the recent strength and how sustainable this might be for the rest of the year and maybe into next? Hilton H. Schlosberg: Okay. So let's talk first about supply chain optimization. What we've been able to achieve is a good balance between our own production which now accounts for probably just around 10% of our sales in the U.S. and a very well-balanced co-packing model. Our objective always has been to get the lowest delivered price to our customers. And that's been an objective and it's one of the reasons why we are not producing more in our Phoenix facility because we've got such a great balance of co-packers that are able to achieve that objective of the lowest landed cost price to our customers. So that's supply chain. Let's talk a little bit about the category. As we said earlier, when we spoke about July sales, sales trends in the category remains strong. Per scanner data, the category is up 13.2% in the last 4 weeks. Monster is up 12%, and our MC share, unfortunately has been impacted by the other brands, not Monster. And really, we've seen strong increases across all regions. We look at where we are in July and all of our regions are increasing nicely. So why has the market changed? At the end of the day, what we look at is that the pricing of our products at retail are very much competitive with comparable CSDs. And traditionally, there was a gap -- historically, there was a gap but now that gap is starting to close. And there's a strong appetite from consumers for functionality and a move towards our products and our competitors' products. So overall, innovation has driven the growth in the category and in our own sales. And also, there's this whole move that alcohol is not as appealing as historically it's been, and we believe that's creating more opportunities for energy and certainly more space for energy in the -- in customers' coolers. So there's nothing really more than I can add other than we're excited to be part of this category. And everyone was like kind of concerned last year, and I think at the time, we said that our belief was that there's a strong motivation, strong acceleration in the category and you're now seeing it. So I'm not sure I can add any more color, Bonnie. Operator: And our next question today comes from Chris Carey at Wells Fargo Securities. Christopher Michael Carey: I wanted to follow up just on the quarter-to-date number, exceptionally strong. Hilton you just said that all regions are growing. Is there any pull forward that you're seeing ahead of those pricing discussions? Any timing dynamics that we should be thinking about that's driving some of that strength? And then if I could just follow up on this broader topic of the energy drink category. It's been a really strong year. And certainly, we're already looking forward to next year and the sustainability of the category clearly, you're going to potentially have this pricing in Q4. But can you just talk about maybe what happened last year why you think the category slowed, whether it was a lack of innovation, lack of pricing and how you're starting to think about the next 12 months between strength of innovation. Obviously, you're going to have pricing. And any other tidbits that you might give us to lessen some of the anxiety as we start lapping the really strong performance. So thanks for the clarification on the quarter-to-date and sorry for the longer-winded question going into next year. Hilton H. Schlosberg: Yes. Let's start with the longer question for next year. So there's an easy answer. We don't give guidance. So it's really hard for us to talk about 2026 other than to say that we've got a very strong innovation pipeline. And we're really excited about what will happen in the fall with our innovation, what's happening internationally with our innovation and what could happen in 2026 with our innovation program. Talking about what happened last year, it's -- it's kind of difficult because I don't think anyone knows. We surmised at the time that there were lots of issues. It was pre-election, consumers, there was high inflation. There's high gas prices. Consumers were holding back but we've always said -- and this -- we passionately believe that energy offers a need state it's a functional beverage. And we continue to see increased household penetration. We regard energy drinks as an affordable luxury. We're seeing a lot of growth of diets versus full sugar. I mentioned the NARTD price comparison. And there's been a big opportunity with the trend in coffee and the pricing trends in coffee. And also the impact on the coffee industry of the cold brews, which didn't do as successful as people expected. So there's a whole move towards why we believe this category is a good category and why we think it will continue to grow. Operator: And our next question today comes from Steve Powers of Deutsche Bank. Stephen Robert R. Powers: Hilton, case growth this quarter notably outpaced realized revenue growth, which obviously resulted in a lower all-in price per case in the quarter. I was hoping you could maybe break that apart a bit. You mentioned higher promotional investments this quarter. But obviously, we've also got mix factors both geographic and within the segments, strategic brands outpaced Monster. So just a little bit of if you could just dissect the different drivers of the lower price per case and just call anything that may be anomalous or unique to this quarter versus something that is more extrapolatable. Hilton H. Schlosberg: I think you answered your own question, to be honest, because as we look at the quarter, 41% of sales internationally is kind of a first, and you know the impact of gross margin of international versus domestic. Secondly, we are internationally setting a significant amount now of affordable brands. And you correctly spoke about the Strategic Brands segment growing faster than the energy drink, the Monster Energy Drink segment in the quarter. So all of those factors, geographic mix, product mix, sales mix all contributed to the results that you're talking about. Operator: And our next question today comes from Rob Ottenstein with Evercore. Robert Edward Ottenstein: Hilton, early on in the call, you mentioned -- I couldn't quite follow. You mentioned something about I thought changing the visual identity on the Ultra line. And then there was something about Unleashed and I somehow it came in and out, and I didn't quite follow exactly what you're saying, but if maybe you could talk in a little bit more detail on what you are doing and why you're doing it, given that the Ultra line has been so successful? Hilton H. Schlosberg: The Ultra line has been very successful, and it's -- of late, it's becoming even more successful. And all it is, is an objective to establish the Ultra line given a separate identity with a silver claw very similar to what we have today but have separate coolers to be able to better merchandise the product. So it will have a new visual identity, it will have better space through increased cooler capacity and its own coolers and again, commercial stacks on stores, cases on the floor and we are great believers in that part of the business. And I think you probably noticed as probably a lot of our investors have noticed, a lot of our analysts is there's a whole kind of viral campaign on Zero Ultra in EMEA that's carried through to the U.S. and there's a significant amount of passion that we're using to build upon to really market that line more effectively. Operator: Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to Hilton Schlosberg for closing remarks. Hilton H. Schlosberg: Thank you. On behalf of Monster, I'd like to thank everyone for their continued interest in the company. I remain confident in the strength of our brands and the talent of not only our executive management team but also our entire family -- Monster family throughout the world, and I'm excited to be working with them all. 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, capitalizing on our relationship with the Coca-Cola bottler system we believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. Thank you for your attendance. Operator: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

Operator: Good day. And welcome to the Monster Beverage Corporation First Quarter 2025 Financial Results Conference Call. All participants will be in 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 like now to turn the conference over to Mr. Rodney Sacks; and Mr. Hilton Schlosberg, Co-CEOs. Please go ahead. Rodney Sacks: Good afternoon, ladies and gentlemen. Thank you for attending this call. I’m Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer is on the call, as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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 subdued 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, 2025, including the sections contained therein, entitled Risk Factors and Forward-Looking Statements for Discussion on Specific Risk 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. I would also like to note that an explanation of the non-GAAP measures, which may be mentioned during the course of this call, is provided in the notes and the condensed, consolidated statements of income and other information attached to the earnings release dated May 8, 2025. A copy of this information is also available on our website, www.monsterbevcorp.com, in the Financial Information section. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thanks, Tom. Trends in our Nielsen-measured categories have been accelerating since early 2025. Consumer purchases in our non-Nielsen-measured categories are following the same trend. Growth opportunities in household penetration and per capita consumption, along with consumers’ growing need for energy, are positive trends for the category. In the United States, the energy category, according to Nielsen, for the recently reported 13 weeks through April 26, 2025, grew at 10% versus the same period last year. In EMEA, the energy drink category, according to Nielsen, for our tracked markets for the recently reported 13-week period, which differs from country to country, grew at approximately 13.7% versus the same period last year on an FX-neutral basis. In APAC, the energy drink category, according to Nielsen and INTAGE, for the recently reported 13-week period, which differs from country-to-country, grew at approximately 13.6% versus the same period last year, also on an FX-neutral basis. In LatAm, the energy drink category, according to Nielsen, for our tracked markets for the recently reported 13-week period, which differs from country-to-country, grew at approximately 15.7% versus the same period last year on an FX-neutral basis. This does not include Argentina and Chile. Net sales for the 2025 first quarter were negatively impacted by bottler/distributor ordering patents, specifically in the United States and EMEA. Adverse changes in foreign currency exchange rates decreased sales in the Alcohol Brand segment, adverse weather, one less selling day in the 2025 first quarter, as well as uncertain economic conditions. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2025 first quarter of $57.3 million. On a foreign currency-adjusted basis, net sales for the 2025 first quarter increased 0.7% or 1.9% excluding the Alcohol segment. Reported net sales were $1.85 billion in the 2025 first quarter or 2.3% lower than net sales of $1.9 billion in the comparable 2024 first quarter. Gross profit as a percentage of net sales for the 2025 first quarter was 56.5%, compared with 54.1% in the 2024 first quarter. The increase in gross profit as a percentage of net sales for the 2025 first quarter was primarily the result of pricing actions, as well as supply chain optimization in the quarter. Operating expenses for the 2025 first quarter were $478.2 million, compared with $485.1 million in the 2024 first quarter. As a percentage of net sales, operating expenses for the 2025 first quarter were 25.8%, compared with 25.5% in the 2024 first quarter. Distribution and warehouse expenses for the 2025 first quarter were $77.6 million or 4.2% of net sales, compared with $94.4 million or 5% of net sales in the 2024 first quarter. Operating income for the 2025 first quarter increased 5.1% to $569.7 million from $542 million in the 2024 comparative quarter. Operating income for the 2025 first quarter, exclusive of the Alcohol Brand segment, increased 7.9% to $591.2 million from $548 million in the 2024 first quarter. The effective tax rate for the 2025 first quarter was 23.4%, compared with 23.5% in the 2024 first quarter. Net income in the 2025 first quarter was $443 million as, compared to $442 million in the 2024 comparable quarter. Diluted earnings per share for the 2025 first quarter increased 7.4% to $0.45 from $0.42 in the first quarter of 2024. Diluted earnings per share for the 2025 first quarter, exclusive of the Alcohol Brand segment, increased 10.2% to $0.47 from $0.42 in the first quarter of 2024. During the first quarter of 2025, the impact of tariffs on our operating results was immaterial. In general, while our concentrates are manufactured both in the U.S. and Ireland at the present time, production of our finished products takes place locally in our respective markets. The tariff landscape is complicated and dynamic. We import some raw materials into the United States, export certain raw materials for local markets, and export limited quantities of finished products. We do not believe, based on our business model, that the current tariffs will have a material impact on the company’s operating results. We will recognize tariffs on aluminum through the higher Midwest premium and are reviewing mitigation strategies across the business. For instance, AAF, our flavor and concentrate subsidiary, is planning to establish a facility in Brazil, which should be operational later in 2026. According to the Nielsen reports for the 13 weeks ended April 26, 2025, for all outlets combined, excluding convenience and gas, sales in dollars in the energy drink category, including energy shots, increased by 13.8% versus the same period a year ago. According to the Nielsen reports for the 13 weeks ended April 26, 2025, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 10% versus the same period a year ago. Sales of the company’s energy drink brands, including Bang, were up 6.9% in the 13-week period. Sales of Monster increased 8.7%. Sales of Reign were down 9.9%. Sales of NOS increased 0.8%, and sales of Full Throttle decreased 1.5%. Sales of Red Bull increased 15.6%. According to Nielsen, for the four weeks ended April 26, 2025, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots, increased 8.9% over the same period the previous year. Sales of the company’s energy drink brands, including Bang, were up 6.8% in the latest four-week period in the convenience and gas channel. Sales of Monster increased by 8.2% over the same period versus the previous year. Reign’s sales decreased 6%, NOS was up 1.9% and Full Throttle was down 1.7%. Sales of Red Bull were up 15.2%. According to Nielsen, for the four weeks ended April 26, 2025, the company’s market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased from 37.1% to 36.4%, including Bang. Monster’s share decreased from 29.2% to 29%. Reign’s share decreased 0.4 of a share point to 2.6%. NOS’ share decreased 0.1 of a share point to 2.5%. And Full Throttle’s share decreased from 0.7% to 0.6%. Bang’s share was 1.7%. Red Bull’s share increased 2 share points to 36.8%. Market share of certain competitors were as follows. CELSIUS 7.8%, C4 3.5%, GHOST 2.9%, 5-Hour 2.8%, Alani Nu 2.7% and Rockstar 2.4%. According to Nielsen, for the four weeks ended April 26, 2025, sales in dollars of the coffee + energy drink category, which includes our Java Monster and Killer Brew lines in the convenience and gas channel, decreased 1.2% over the same period the previous year. Sales of Java Monster including Killer Brew were 4.4% higher in the same period versus the previous year. Sales of Starbucks Energy Coffee were 11.7% lower. Monster Coffee’s share of the coffee + energy drink category for the four weeks ended April 26, 2025, was 62.1%, up 3.4 points, while Starbucks Energy Coffee’s share was 36.6%, down 4.4 points. According to Nielsen, in all major channels in Canada, for the 12 weeks ended March 22, 2025, the energy drink category increased 9.4% in dollars. Sales of the company’s energy drink brands increased 11.4% versus a year ago. The market share of the company’s energy drink brands increased 0.7 of a point to 40.9%. Monster’s sales increased 8.5% and its market share decreased 0.3 of a share point to 36.1%. NOS’ sales increased 12.4% and its market share increased 0.1 of a point to 1.2%. Full Throttle’s sales increased 6.2% and its market share remained at 0.5 of a percent. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 9% for the month of March 2025. Monster’s sales increased 15.3%. Monster’s market share in value increased 1.7 points to 31.3% against the comparable period the previous year. Sales of Predator increased 22.2% and its market share increased 0.7 of a share point to 6.4%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced, positively and or negatively, by sales in the OXXO convenience chain which dominates the market. Sales in the OXXO convenience chain, in turn, can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for all outlets combined in Brazil, the energy drink category increased 33.7% for the month of March 2025. Monster’s sales increased 26.5%. Monster’s market share in value decreased 2.6 points to 45.2% compared to March 2024. According to Nielsen, for all outlets combined in Chile, the energy drink category increased 1.6% for the month of March 2025. Monster’s sales decreased 3.5%. Monster’s market share in value decreased 2.2 points to 40.7% compared to March 2024. According to Nielsen, for all outlets combined in Argentina, in March 2025, Monster’s market share in value decreased 6.5 points to 52% compared to March 2024. We are the market share leader in Brazil, Chile and Argentina. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period ending March 30, 2025, Monster’s retail market share in value, as compared to the same period the previous year, grew from 16.2% to 18% in Belgium, from 22.6% to 24.4% in the Czech Republic, from 26.9% to 27.7% in Denmark, from 32.1% to 33.2% in Great Britain, from 15.8% to 18.1% in Germany, from 6.6% to 11.1% in The Netherlands, from 32.8% to 36.9% in Norway, from 18.6% to 21.3% in Poland, and from 30.2% to 33.4% in the Republic of Ireland. According to Nielsen, in the 13-week period ending March 30, 2025, Monster’s retail market share in value, as compared to the same period the previous quarter, remained flat at 40.7% in Spain and 14.7% in Sweden. According to Nielsen, in the 13-week period ending March 30, 2025, Monster’s retail market share in value, as compared to the same period the previous year, declined from 32.2% to 27.4% in France, and from 19.9% to 18.2% in South Africa. According to Nielsen, in the 13-week period ending February 28, 2025, Monster’s retail market share in value, as compared to the same period the previous year, grew from 34.9% to 35.9% in Greece and from 30.3% to 31.1% in Italy. According to Nielsen, in the 13-week period ending February 28, 2025, the retail market share in value of Predator, also branded Fury in certain markets, as compared to the same period the previous year, grew from 9.8% to 11.9% in Egypt, from 34.3% to 42.1% in Kenya, and from 20.8% to 23.9% in Nigeria. We are pleased that in the 2025 first quarter, Monster gained market share in Belgium, the Czech Republic, Denmark, Great Britain, Germany, Greece, Italy, The Netherlands, Norway, Poland and the Republic of Ireland. According to Cercana, for all outlets combined in Australia, the energy drink category increased 8.1% for the four weeks ending April 20, 2025. Monster’s sales increased 22.2%. Monster’s market share in value increased 2.8 points to 24.7% against the comparable period the previous year. Sales of Mother decreased 11.2% and its market share decreased two share points to 9.2%. According to Nielsen, for all outlets combined in New Zealand, the energy drink category increased 17.1% for the four weeks ending April 27, 2025. Monster’s sales increased 23.9%. Monster’s market share in value increased 0.8 of a share point to 15.5% against the comparable period the previous year. Sales of Mother decreased 9.3% and its market share decreased 1.6 share points to 5.3%. Sales of Live+ decreased 4.5% and its market share decreased one share point to 4.4%. According to INTAGE, in the convenience channel in Japan, the energy drink category increased 6.6% for the month of March 2025. Monster’s sales increased 0.6 of a percent. Monster’s market share in value decreased 3.4 points to 56.1% against the comparable period the previous year. According to Nielsen, for all outlets combined in South Korea, the energy drink category increased 18.3% for the month of March 2025. Monster’s sales increased 24.8%. Monster’s market share in value increased 2.8 points to 54.7% against the comparable period the previous year. Monster remains the market leader in Japan and South Korea. We again point out that certain market statistics that cover single months or four-week periods may often be materially influenced, positively and or negatively, by promotions or other trading factors during those periods. Net sales to customers outside the United States on a foreign currency-adjusted basis increased 6.2% to $790.5 million in the 2025 first quarter. Reported net sales to customers outside the U.S. were $733.2 million, 35.9% of total net sales in the 2025 first quarter, compared to $744.1 million, or 39.2% of total net sales in the corresponding quarter in 2024. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $57.3 million in the 2025 first quarter. In EMEA, net sales for the 2025 first quarter decreased by 2.6% in dollars, but increased 2.1% on a currency-neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales for the 2025 first quarter was 35.1% versus 34% in the same period in 2024. In Asia-Pacific, net sales in the 2025 first quarter increased 10.4% in dollars and increased 16% on a currency-neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales for the 2025 first quarter was 42.4% versus 42.6% in the same period in 2024. Net sales in Japan in the 2025 first quarter decreased 3.5% in dollars, but increased 1.3% on a currency-neutral basis. In South Korea, net sales in the 2025 first quarter decreased 2.5% in dollars and increased 6.8% on a currency-neutral basis as compared to the same quarter in 2024. In China, net sales in the 2025 first quarter increased 40.1% in dollars and increased 43.2% on a currency-neutral basis as compared to the same quarter in 2024. We remain optimistic about the long-term prospects for the Monster brand in China, and are excited about Predator, which is being rolled out to additional markets in China. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 21.6% in dollars and increased 28.8% on a currency-neutral basis. In Latin America, including Mexico and the Caribbean, net sales in the 2025 first quarter decreased 3.1% in dollars, but increased 14.4% on a currency-neutral basis over the same period in 2024. Gross profit in this region as a percentage of net sales was 44.6% for the 2025 first quarter versus 42.8% in the 2024 first quarter. In Brazil, net sales in the 2025 first quarter decreased 5.3% in dollars and increased 13.4% on a currency-neutral basis. Net sales in Mexico decreased 4.7% in dollars and increased 14.1% on a currency-neutral basis in the 2025 first quarter. Net sales in Chile decreased 24.2% in dollars and decreased 18.5% on a currency-neutral basis in the 2025 first quarter. Net sales in Argentina increased 20.7% in dollars and increased 65.7% on a currency-neutral basis in the 2025 first quarter. Monster Brewing continued to face challenges in the first quarter. We remain focused on optimizing our personnel and facilities to support the current demand for our Monster Brewing portfolio and innovation pipeline. Net sales for the Alcohol Brand segment were $34.7 million in the 2025 first quarter, a decrease of approximately $21.4 million or 38.1% lower than the 2024 comparable quarter, largely as a result of the launch of Nasty Beast Hard Tea in the first quarter of 2024. As planned, Michi, our newest flavoured beer innovation, is being shipped to distributors and retailers and is in the process of a national launch in two 24-ounce flavors, Michi Lime Chelada and Michi Tomato Michelada. We are planning to launch the Beast in certain international markets, subject to regulatory approvals. We are planning for further innovation in Monster Brewing in the coming months. In the United States, in January, we launched Reign Storm Tropical, Bang Sour Ropes and Monster Ultra Blue Hawaiian at retail. In February, we launched Juice Monster Viking Berry, Killer Brew Mean Bean, Killer Brew Loca Moca and Reign Turtle Body Fuel White Haze. In March, we launched Bang Any Means Orange. In Canada, during the first quarter of 2025, we launched Monster Energy Ultra Fantasy Ruby Red, Monster Rio Punch, Java Monster Irish Crème, Reign Turtle Body Fuel Sour Gummy Worm, Monster Reserve Peaches N Crème, Monster Rehab Green Tea, Reign Storm Guava Strawberry and Citrus Zest and Bang Cotton Candy. In Latin America, during the first quarter of 2025, we launched a series of innovations within the Ultra family. In January, we launched Ultra Peachy Keen in Chile. This was followed in March by the launch of Ultra Fiesta in Brazil. In Puerto Rico, we launched Reign Tropical Storm, Reign Sour Gummy and Cafe -- Java Cafe Latte. Lastly, we launched Pipeline Punch in Peru. In EMEA, in the first quarter of 2025, we launched Monster Green Ultra Sugar, Juiced Bad Apple, Juiced Rio Punch, Ultra Fantasy Ruby Red, Ultra Peachy Keen, Ultra Strawberry Dreams, Burn Guava and Burn Orange Fire in certain countries in EMEA. Additional launches are planned throughout EMEA in 2025 of various products in different countries. In Australia, during the month of March, we launched Monster Ultra Fantasy Ruby Red. During the first quarter of 2025, we launched Monster Ultra Fantasy Ruby Red in Japan, Monster Ultra Strawberry Dreams in South Korea, Monster Aussie Lemonade in Hong Kong and Taiwan, and Monster Pipeline Punch in Vietnam. Additionally, we remain optimistic about the long-term prospects for the Monster brand in China and India, and are excited about the incremental expansion of the Predator brand in these two countries. Notably, in China, we implemented the national rollout of the Predator brand in all provinces. During the 2025 first quarter, no shares of the company’s common stock were repurchased, as of May 8, approximately $500 million remained available for repurchase under the previously authorized repurchase program. We estimate that on a foreign currency adjusted basis, April 2025 sales were approximately 16.7% higher than the comparable April 2024 sales, and 17.6% higher on a foreign currency adjusted basis excluding the Alcohol Brand segment. We estimate that April 2025 sales on a non-foreign currency adjusted basis were approximately 15.3% higher than the comparable April 2022 sales, and 16.1% higher on a non-foreign currency adjusted basis excluding the Alcohol Brand segment. April 2025 has the same number of selling days as April 2024. We estimate that year-to-date sales through April 30, 2025 on a foreign currency adjusted basis excluding the Alcohol Brands were approximately 6.9% higher than the comparable period in 2024 and 5.8% higher on a foreign currency adjusted basis including the Alcohol Brand segment. We estimate that year-to-date sales through April 30, 2025 on a non-foreign currency adjusted basis were approximately 3.3% higher than the comparable period in 2024, and 4.3% higher on a non-foreign currency adjusted basis excluding the Alcohol Brand segment. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors, such as, for example, selling days, days of the week in which holidays fall, timing of new product launches, the timing of price increases, the promotions in retail stores, distributor incentives, as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time-to-time for their own business reasons. We reiterate that sales over a short period, such as a single month, should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. The energy category continues to grow globally. We believe that household penetration continues to increase in the energy drink category. Growth opportunities in household penetration, per capital consumption, along with consumers’ need for energy, are positive factors for the category. We continue to expand our sales in non-Nielsen measure channels. Globally, as measured by our scanner track data, consumer demand remains strong. In the United States, the energy category, as measured by Nielsen, accelerated through the quarter and remained strong in April. Similarly, Monster sales at retail, as measured by Nielsen, accelerated through the quarter and remained strong in April. We continue to review opportunities for price increases domestically and internationally. Our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. The juice plant at our AFF facility in Ireland has now been completed. After trials, we expect the juice plant to be in production by midyear. We are excited for our 2025 innovation pipeline globally. We are currently exploring opportunities for our alcohol products in certain international jurisdictions. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio, in a number of markets internationally. We are proceeding with plans for further launches of our affordable energy brands. I would now like to open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] Our first question comes from Kaumil Gajrawala of Jefferies. Please go ahead. Kaumil Gajrawala: Hey, guys. Rodney Sacks: Hi. Kaumil Gajrawala: A couple questions on timing. You mentioned a bit about supply chain optimization and maybe some purchase timing from bottlers having an impact on the Q1 number. Can you maybe provide some details on how much that was or maybe what’s behind those comments? Hilton Schlosberg: Yeah, I think, Kaumil, if I can take this question that, we mentioned that, the first quarter was impacted by bottler distributor ordering patents in the United States and EMEA. We cannot control how our bottlers order. They order according to their needs. And remember that in the early part of the quarter, there were significant closure days of distribution centers by a number of major bottlers. So you had an interesting situation in the quarter where the numbers were impacted by bottler distribution -- distributor ordering patents. We had adverse changes in Forex, as you know. Decreased sales in the Alcohol Brand segment. And the weather, which I mentioned earlier, there was one less selling day. And against this whole backdrop, you have these very difficult uncertain economic conditions. So that was a tale of the quarter. But then we turned you to April, where April was a really robust month. And we showed what the results would have been were the numbers cumulative, the sales numbers cumulative to April. So that’s a picture of the quarter. April, very strong, very robust, as we would have expected, given what had happened in the quarter. You’ve got the cumulative numbers to April. And then with regard to supply chain optimization, that really impacted gross profit and that together with the benefits in selling prices, really benefited the gross profit line. Operator: Our next question comes from Dara Mohsenian of Morgan Stanley. Please go ahead. Dara Mohsenian: Hey. Good afternoon, guys. So moving beyond the shipments, Rodney, you sounded pretty enthusiastic about the underlying trends we’re seeing in retail takeaway and the Nielsen numbers. So just given the broader macro situation, just wanted to get any perspective on if you think we’re seeing any macro impact on the category, either in the U.S. or internationally, again, looking at retail sales. And then also maybe just in the U.S., given we’ve seen the category rebound while a number of other consumer CPG segments have dropped off and we’ve seen category weakness elsewhere, just curious for your perspective on some of the drivers of the energy category rebound and how sustainable they might be going forward? Thanks. Rodney Sacks: I mean, I think, Hilton will give you his view on it. I think that the important thing is that you’ve just got to look at the depletions. You look at the Nielsens. At the end of the day, they are a much more accurate and a more balanced reflection of the health of the brands that we have, health of our sales and health of the category. And I think those have shown increases and you just got -- and that’s why we pointed to this mismatching. And ultimately, though, it’s the consumer demand that tells ultimately where things are going to be headed. And those are continuing to improve through the quarter and continue to improve through April. And that’s why we did, and as Hilton mentioned, we’ve really given you the numbers for four months, which shows that continuing trend. And it’s similar even in overseas markets as well. You’ve seen some of the Nielsen numbers. You’ve seen some of the reported numbers of the bottlers. Again, I think look to the end demand, which is better represented by the Nielsens and depletions even from our bottlers than our numbers, which are a little more choppy. But we can’t really give you any more color on it than that. But other than to say the category is healthy. We had some slowdown a little bit last year. We also are seeing some improved numbers. And it’s an affordable luxury at the end of the day. And the numbers continue to be strong. And we are -- for that reason, we are very, very positive about our prospects going forward in the rest of the year. Hilton Schlosberg: Yeah. I think that’s right. I mean, if you look at, for example, the bottlers that have reported and do report energy sales, CCP showed an increase of 12%. Hellenic in the quarter showed an increase of 26%. And then just off left field, we had a situation in Korea where LG reported an increase of 45.8%. So we’ve seen a lot of positive trends in the bottlers. We had these closures of distribution centers. And from that perspective, if you analyze the quarter and you take into account the direct business that we do, and we do a fair amount of direct business. But the majority, of course, is done through the distributors. You’ll see that the trend in the direct business was in line with what we would have expected. And if you look at the sales through the, sales to, not sales through, but the sales to the bottler distributors, there was a bit of choppiness in those numbers. Operator: The next question comes from Filippo Falorni of Citi. Please go ahead. Filippo Falorni: Hi. Good afternoon, everyone. I wanted to ask on gross margin, clearly very solid performance in Q1. You mentioned the drivers really being pricing and supply chain optimization. How should we think about those contributions going forward? And then on the aluminum side, clearly the Midwest premium has gone up quite a bit as a result of the tariff. So last quarter, you mentioned you were pretty well hedged in 2025. Can you give us an update on your hedging and potential mitigation action for the Midwest premium? Thank you. Rodney Sacks: Yeah. So we use a lateral approach for hedging. And it’s very difficult and it’s somewhat expensive to hedge the Midwest premium. So to a limited degree, we are hedged with certain volumes in the Midwest premium. But we are -- we are nicely hedged on metal. But as all things happen, metals come down. So what we’re happy about is the fact that we try and mitigate our risk. That’s the objective of our hedging program. We don’t always win, but we mitigate our risk and that is very important. We don’t leave ourselves exposed. So talking about gross margins, looking forward, and you actually answered the question yourself because, yes, we are seeing an impact in the Midwest premium. Yes, we are seeing certain materials going up. So I wouldn’t expect that the second quarter margin will be as high as the first quarter margin. And let me leave it as that because we don’t give guidance. But I think you can read into what I’m saying. Operator: Our next question comes from Bonnie Herzog of Goldman Sachs. Please go ahead. Bonnie Herzog: All right. Thank you. Hi, everyone. Hilton Schlosberg: Hi, Bonnie, we never thought you’d get on. What’s going on? Bonnie Herzog: Well, you met me on earlier. I’m here waiting patiently. But I just have a couple of follow-up questions on your topline. You did give a lot of color. But first, I’d be curious to hear, how much lower were your reported sales during the quarter versus maybe your internal expectations? And then second, curious about your innovation pipeline. Are there any shipment timing impacts on innovation to consider in Q1 maybe versus Q2? I mean, you called out a lot. You highlighted a lot of innovation. So should we assume you have more innovation rolling out during the first half of this year versus the second half or is there a lot more planned for later this year? Thank you. Hilton Schlosberg: There was more innovation rolling out in Q1 than in Q2. But it does take time. One of the great successes we’ve been able to achieve with Ultra Blue Hawaiian and with Vice Guava was we were able to get product on the shelves a lot quicker than ordinarily we would have. So you will see that there will continue to be an acceleration in distribution. But Q1 would see more innovation in sales than in Q2. And of course, there’s some loading that happens as the distributors get ready for the innovation that’s coming in the quarter. Rodney Sacks: Just to add, just on the second half of the year, we will -- we do have some innovation planned for the fall. So there will be also some innovation in the second half as well. Hilton Schlosberg: Correct. Correct. Operator: Our next question comes from Kevin Grundy of BNP Paribas. Please go ahead. Kevin Grundy: Great. Thanks. Good evening, guys. Two-part question for me and they’re related. I’d like to get your thoughts on pricing dynamics in the category. Your key competitor has not followed at this point and I wonder how concerning that is for you competitively. And then related to that, just how you think about your overall level of satisfaction from a market share perspective. And I ask that in the context that your value share has leveled off here sequentially. I know that’s been encouraging to the market. The flip side is your volume share is off, and that’s declining. You’re just not seeing the volume uplift. Naturally, there’s some demand elasticity with the pricing that you’ve taken. So two-part question, sort of overarching views on the pricing dynamics in the category. And then, secondarily, your overall level of satisfaction with what you’re seeing in the U.S. from a market share perspective? So thank you for that, guys. I appreciate it. Hilton Schlosberg: Yeah. Kevin, if I could address that. Firstly, with regard to pricing, we are always looking at opportunities in the market based on various factors. We have and run our own play. So what the competitors do and what they don’t do really doesn’t impact our decision. And if you look at energy today, there’s a huge value proposition on energy versus carbonated soft drinks. Because traditionally, you saw there was a big divide between carbonated soft drinks and energy. And now, with the increases in carbonated soft drinks and the single serve carbonated soft drinks, you’ll see that that gap has dramatically reduced. So there are opportunities. We’ll consider them. And we’ll evaluate them as time comes. We’ve said that in Europe and in other parts of the world, we’ll continue to evaluate pricing as we will in the United States. And then, regarding share, obviously, it’s something that we’re very proud people here. And our objective is to increase and regain share. I mean, we just had a huge sales rally in -- for our sales organization and that was one of the major factors on the agenda. And Rob Gehring has that very pride of place in his mind is to regain market share. We’re very aware of it. And we believe we’ve got good plans to be able to accommodate it. We’ve got some great innovation in the pipeline. And we’ve also got to understand that encouraging, accelerating sales and volume trends in the United States are really encouraging, despite the price increase that we took. So, all in all, I think that we’ll do what we can and move forward. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Rodney Sacks for any closing remarks. Rodney Sacks: On behalf of Monster, I’d like to thank everyone for their continued interest in the company. I would like to just mention that in my remarks on the April sales, I may have misadvertently referred to the comparable April as April 2022, as opposed to April 2024, just to clarify that. We continue to believe in the company and in 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, capitalizing on our relationship with the Coca-Cola bottler system. We believe that we are well-positioned in the beverage industry and continue to be optimistic about the future of our company. One thing I would just like to perhaps just spend a minute on is to just say to you that, as most of you are aware, I have decided to step back from my position as Co-CEO and that will happen on -- after the Shareholder Meeting on the 12th of June. And so this will probably be my last meeting in which I will take in my capacity as Co-CEO. But that’s been 30 years, and I wanted to thank everybody. It’s been really a great privilege to be in this position, to have dealt with you guys, have taken these meetings, and been involved in every aspect. And I want to thank you, the analysts and the investors, for the support and confidence you’ve had in us, in me and the whole executive team. And I will still be involved as Chairman, but won’t be involved in my current position and look forward to continuing to having a relationship with everybody. But things, everything in life moves on and I just want to thank you all for that. Thank you very much for your attendance and I will probably speak to you guys at the Annual Shareholder Meeting in June and then we’ll move forward from there. Thanks very much. Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

Operator: Good day, and welcome to the Monster Beverages Company Fourth Quarter and Full Year 2024 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 Co-CEOs, Rodney Sachs and Hilton Schlosberg. Please go ahead. Rodney Sacks: Thanks. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and my Co-Chief Executive Officer is on the call, as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Thomas Kelly: 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 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 February 29, 2024 and are subsequently filed quarterly reports on Form 10-Q, 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 obligations to update any forward-looking statements whether as a result of new information, future events or otherwise. I would also like to note that an explanation of the non-GAAP measures, which may be mentioned during the course of this call is provided in the notes in the condensed consolidated statements of income and other information attached to the earnings release dated February 27, 2025. A copy of this information is also available on our website, www.monsterbevcorp.com in the Financial Information section. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thanks, Tom. We continue to see sustained growth in the global energy drink category. In the United States, we are seeing a resurgence of growth in the energy drink category in the convenience, as well as in all measured channels reported by Nielsen. Our non-Nielsen channels continue to grow as well. Growth opportunities in household penetration and per capita consumption along with consumers' growing need for energy are positive trends for the category. Hurricanes Helene and Milton impacted sales at retail in certain states in October 2024. However, we have not determined the impact on our business. The alcohol segment operates a brewery in Brevard, North Carolina, which was closed for a week due to flooding from Hurricane Helene. This brewery was partially operational for a period and was fully operational by mid-November 2024. In the United States, the energy category according to Nielsen for the recently reported 13 weeks through February 15, 2025 grew at 6.2% versus the same period last year. In EMEA, the energy drink category according to Nielsen for our tracked markets for the recently reported 13 week period, which differ from country-to-country grew at approximately 14.4% versus the same period last year. In APAC, the energy drink category according to Nielsen and INTAGE for our tracked markets for the recently reported 13 week period, which differ from country-to-country grew at approximately 11.8% versus the same period last year. And in LatAm, the energy drink category according to Nielsen for our tracked markets for the recently reported 13 week period, which differ from country-to-country grew at approximately 20.2% versus the same period last year. In each case, these are done on a FX neutral basis. Certain items should be separately considered in evaluating the results for the quarter. These specific items are as follows: gross profit for the 2024 fourth quarter was adversely impacted by an increase in inventory reserves due to excess inventory levels in the Alcohol Brands segment of $4.1 million, in which I will now refer to as the Alcohol Brands Inventory Reserves. Operating expenses for the 2024 fourth quarter were adversely impacted by $130.7 million of impairment charges related to the Alcohol Brands segment. The impairment charges were primarily the result of operating and financial performance not meeting projections due in part to challenges in the category, as well as the decrease in projected ongoing operating and financial performance. In addition, operating expenses for the 2024 fourth quarter were adversely impacted by $1.8 million of company incurred legal expenses in connection with an intellectual property claim brought by the descendants of Hubert Hansen, in relation to the company's use of the Hubert Hansen name prior to the transaction with the Coca-Cola Company, which closed in 2015, and which we will now refer to as the Hansen Litigation. Operating income adjusting for these items rose 7.9% to $517.9 million in the 2024 fourth quarter. Net of tax, these items adversely impacted net income for the 2024 fourth quarter by $105 million and net income per diluted share by $0.10 per share. Diluted earnings per share for the 2024 fourth quarter adjusted for these items was $0.38 per share. As a reminder, the bank inventory step up and impairment in the Alcohol Brands segment were previously disclosed as items impacting profitability for the comparative 2023 fourth quarter. In addition to our GAAP condensed consolidated statement of income and other information and our GAAP consolidated balance sheet for the company for the quarter ended December 31, 2024, attached to our press release is a non-GAAP adjusted condensed consolidated statement of income and other information adjusting for the items impacting profitability and a reconciliation of GAAP and non-GAAP information. We believe that these non-GAAP items are useful to shareholders on this call in evaluating our ongoing operating and financial results. These non-GAAP items should be considered in addition to and not in lieu of U.S. GAAP financial measures. The company achieved record fourth quarter net sales of $1.81 billion, in the 2024 fourth quarter. $1.81 billion, sorry, sorry, 4.7% higher than net sales of $1.73 billion in the comparable 2023 quarter, 4.8% excluding the Alcohol segment. On a foreign currency adjusted basis, net sales for the 2024 fourth quarter increased 7.8% or 7.9%, excluding the Alcohol segment. Gross profit as a percentage of net sales for the 2024 fourth quarter was 55.3% compared with 54.2% in the 2023 fourth quarter. Gross profit for the 2024 fourth quarter was adversely impacted by the Alcohol Brands inventory reserves, gross profit as a percentage of net sales for the 2024 fourth quarter, exclusive of the alcohol brands inventory reserves was 55.5%. The increase in gross profit as a percentage of net sales for the 2024 fourth quarter was primarily the result of reduced input costs partially offset by geographical sales mix. On a sequential quarterly basis, gross margins were higher than the 2024 third quarter gross margins. Operating expenses for the 2024 fourth quarter was $621.2 million compared with $504.4 million in the 2023 fourth quarter. The increase in operating expenses were primarily the result of increased impairment charges within the Alcohol Brands segment, increased payroll expenses and increased sponsorship and endorsement expenses. As a percentage of net sales, operating expenses for the 2024 fourth quarter were 34.3% compared with 29.2% in the 2023 fourth quarter. Adjusted operating expenses after making the adjustments described earlier, increased 5.5% to $488.7 million as compared to $463.2 million in the 2023 comparable quarter. Adjusted operating expenses as a percentage of net sales for the 2024 fourth quarter were 27% compared with 26.8% in the 2023 fourth quarter. Distribution and warehouse expenses for the 2024 fourth quarter was $77.6 million or 4.3% of net sales compared to $79.6 million or 4.6% of net sales in the 2023 fourth quarter. Operating income in the 2024 fourth quarter decreased 12.2% to $381.2 million from $434 million in the 2023 comparative quarter. Adjusted operating income after making the adjustments described earlier increased 7.9% to $517.9 million as compared to $480.1 million in the 2023 comparable quarter. The effective tax rate for the 2024 fourth quarter was 29.9% compared with 18.5% in the 2023 fourth quarter. The increase in the effective tax rate for the 2024 fourth quarter was primarily attributable to a decrease in the stock-based compensation deduction for the 2024 fourth quarter and adjustment to the 2024 full year effective tax rate higher 2024 state income taxes and the establishment of a state valuation allowance relating to certain net operating losses of the Alcohol Brands segment. Net income for the 2024 fourth quarter was $270.7 million as compared to $367 million in the 2023 comparable quarter. Adjusted net income in the 2024 fourth quarter after making the adjustments described earlier were $375.7 million as compared to adjusted net income of $402.4 million in the 2023 comparable quarter. Diluted earnings per share for the 2024 fourth quarter decreased 20.8% to $0.28 from $0.35 in the fourth quarter of 2023. Adjusted diluted earnings per share after making the adjustments described earlier remained consistent at $0.38 per share for both the 2024 and 2023 fourth quarters. Net sales on a foreign currency adjusted basis increased 8.4% for the 2024 full year. Adjusted net income per diluted share was $1.62 per share for the 2024 full year compared with adjusted net income per share of $1.56 per share for the 2023 full year. Our fourth quarter financial results were again impacted by unfavorable foreign currency exchange rates in certain markets, Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2024 fourth quarter of $52.3 million. As previously reported, we implemented a 5% increase on our brands and packages, excluding bank, rain and rainstorm effective November 1, 2024 in the United States. We are continuing to monitor opportunities for further pricing actions, both domestically and internationally. According to the Nielsen reports, for the 13 weeks ended February 15, 2025, for all outlets combined, excluding convenience and gas, sales in dollars in the energy drink category, including energy shots, increased by 9% versus the same period a year ago. According to the Nielsen report for the 13 weeks ended February 15, 2025, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots increased by 6.2% versus the same period a year ago. Sales of the company's energy drink brands including Bang were up 4.4% in the 13-week period. Sales of Monster increased 4.8%. Sales of Reign were down 6.3%. Sales of NOS increased 2% and sales of Full Throttle decreased 0.8%. Sales of Red Bull increased 10%. According to Nielsen, for the four weeks ended February 15, 2025, and sales in dollars in the energy drink category in the convenience and gas channel, including energy shots, increased 2.8%. And for the four weeks ended February 8, 2025 were 5.4% over the same period the previous year. Sales of the company's energy drink brands including Bang, were up 2.9% in the latest four-week period in the convenience and gas channel. Sales of Monster increased by 3.1% over the same period versus the previous year. Reign sales decreased 5.2%, NOS was down 1.1% and Full Throttle was down 2.2%. Sales of Red Bull were up 8.3%. According to Nielsen, for the four weeks ended February 15, 2025, the company's market share in the energy drink category in the convenience and gas channel, including energy shots in dollars increased from 36.8% to 36.9%, including Bang. Monster share increased from 29.1% a year ago to 29.2%. Reign’s share decreased 0.2 of a share point to 2.7%. NOS share decreased 0.1% of a share point to 2.5% and Full Throttle share remained at 0.7 of a point. Bang's share was 1.8%. Red Bull's share increased 1.9 share points to 36.9%. Market shares of certain competitors were as follows: CELSIUS, 7.3%; C4, 43.5%; GHOST, 2.9%; Five Hour, 2.9%; Rockstar 2.7%, and Alani Nu 2.2%. According to Nielsen, for the four weeks ended February 15, 2025, sales in dollars in the coffee plus energy drink category, which included our Java Monster line, in the convenience and gas channel decreased 9.1% over the same period the previous year. Sales of Monster including Java Monster 300 was 7.9% lower in the same period versus the previous year. Sales of Starbucks Energy coffee were 16.6% lower. Java Monster share of the coffee plus energy drink category in the four weeks ended February 15, 2025, was 58.9%, up 0.8 point, while Starbucks Energy coffee share was 38.2%, down 3.4 points. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended January 25, 2025, the energy drink category increased 10.3% in dollars. Sales of the company’s energy drink brands increased 10.5% versus a year ago. The market share of the company's energy drink brands increased 0.1 point to 41.4%. Monster's sales increased 7.1% and its market share decreased 1.1 points to $36.1 million. NOS sales increased 13.7% and its market share remained at 1.2%. Full Throttle sales decreased 5%, and its market share decreased 0.1 point to 0.5%. According to Nielsen for all outlets combined in Mexico, the energy drink category increased 11.1% for the month of January 2025. Monster sales increased 13.7%. Monster's market share in value increased 0.7 of a point to 30% against the comparable period the previous year. Sales of Predator increased 27.9% and its market share increased 0.8 of a share point to 6.2%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, all outlets combined in Brazil, the energy drink category increased 13.4% for the month of December 2024. Monster sales increased 15.7%/ Monster's market share in value increased 0.9 of a point to 47.7% compared to December 2023. In Argentina, due in part to the impact of inflation, related to local currency price increases, the energy drink category increased 98.7% for the month of January 2025. Monster sales increased 82.5%. Monster's market share in value decreased 4.5 points to 51.2% compared to January 2024. In Chile, the energy drink category increased 16.2% for the month of January 2025. Monster's sales increased 13%. Monster's market share in value decreased 1.1 points to 39.5%. Monster Energy remains a leading energy brand in value in Argentina, Brazil and Chile. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen, in the 13-week period ending January 26, 2025, Monster's retail market share in value as compared to the same period the previous year, grew from 16.3% to 17.2% in Belgium from 32% to 32.6% in Great Britain, back on our new Great Britain, Nielsen data base from 6% to 9.4% in the Netherlands and from 34.3% to 36% in Norway. According to Nielsen, in the 13-week period ending January 26, 2025, Monster's retail market share in value as compared to the same period for the previous year declined from 30.9% to 27.5% in France. According to Nielsen, in the 13-week period ending December 29, 2024, Monster's retail market share in value as compared to the same period the previous year grew from 22.6% to 23.4% in the Czech Republic, from 17.1% to 17.7% in Germany, from 18.9% to 20.8% in Poland, from 30.3% to 32% in the Republic of Ireland and from 40.8% to 41.4% in Spain. According to Nielsen, in the 13-week period ending December 29, 2024, Monster's retail market share in value as compared to the same period the previous year declined from 27% to 26.1% in Denmark, from 36.1% to 35.6% in Greece, from 31.7% to 31% in Italy, and from 20.1% to 18.4% in South Africa, and from 15.5% to 14.8% in Sweden. According to Nielsen, in the 13-week period ending December 29, 2024, the retail market share in value of Predator was also branded as Fury in certain markets as compared to the same period the previous year, grew from 8.2% to 11.8% in Egypt, from 34% to 41.5% in Kenya, and from 21% to 23.4% in Nigeria. We are pleased that in the 2024 fourth quarter, Monster gained market share in Belgium, Czech Republic, Great Britain, Germany, the Netherlands, Norway, Poland, Republic of Ireland and Spain. According to IRI, all outlets combined in Australia, the energy drink category increased 10.5% for the four weeks ending February 2, 2025. Monster sales increased 22%. Monster's market share in value increased 1.9 points to 20.4% against the comparable period the previous year. Sales of Mother decreased 3.6% and its market share decreased 1.4 share points to 9.4%. According to IRI for all outlets combined in New Zealand, the energy drink category increased 13.8% for the four weeks ending February 9, 2025. Monster sales increased 19.7%. Monster's market share in value increased 0.7 of a share point to 15.3% against the comparable period the previous year. Sales of Mother decreased 1.4% and its market share decreased 0.9 of a share point to 4.6%. Sales of Live+ decreased 0.2 of percent in and its market share decreased 0.6 of a share point to 4.6%. According to INTAGE, in the convenience channel in Japan, the energy drink category increased 5.1% for the month of January 2025. Monster's sales increased 0.4%. Monster's market share in value decreased 2.6 points to 56.8% against the comparable period the previous year. According to Nielsen for all outlets combined in South Korea, the energy drink category increased 25% for the month of January 2025. Monster's sales increased 14.8%. Monster's market share in value decreased 4.4 points to 49.6% against the comparable period the previous year. Monster remains the market leader in Japan and South Korea. We again point out that certain market statistics that cover single months or four week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $711.5 million, 39.3% of total net sales in the 2024 fourth quarter compared to $637 million or 36.8% of total net sales in the corresponding quarter in 2023. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $52.3 million for the 2024 fourth quarter. In EMEA, net sales in the 2024 fourth quarter increased 15.5% in dollars and increased 14.6% on a currency neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales was 32.7% for the 2024 and 2023 fourth quarters. In Asia-Pacific, net sales in the 2024 fourth quarter increased 21% in dollars and increased 19.8% on a currency neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales for the 2024 fourth quarter was 41.3% versus 40.1% in the same period in 2023. Net sales in Japan in the 2024 fourth quarter increased 3.4% in dollars and increased 2.8% on a currency neutral basis. In South Korea, net sales in the 2024 fourth quarter increased 40.3% in dollars and increased 43.3% on a currency neutral basis as compared to the same quarter in 2023, largely due to the timing of production schedules this year. In China, net sales in the 2024 fourth quarter increased 25.8% in dollars and increased 23.9% on a currency neutral basis as compared to the same quarter in 2023. We remain optimistic about the long-term prospects for the Monster brand in China and are excited about Predator, which is being rolled out to additional markets in China throughout this year. In Oceana, which includes Australia and New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 34.6% in dollars and increased 29.6% on a currency neutral basis. In Latin America, including Mexico and the Caribbean, net sales in the 2024 fourth quarter increased 4.9% in dollars and increased 38.4% on a currency neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales was 42.7% for the 2024 fourth quarter versus 38.4% in the 2023 fourth quarter. In Brazil, net sales in the 2024 fourth quarter increased 13.4% in dollars and increased 33.9% on a currency neutral basis. Net sales in Mexico decreased 7.3% in dollars, but increased 4.8% on a currency neutral basis in the 2024 fourth quarter. Net sales in Chile decreased 1.5% in dollars, but increased 3.6% on a currency neutral basis in the 2024 fourth quarter. Net sales in Argentina decreased 20% in dollars, but increased 127.5% on a currency neutral basis in the 2024 fourth quarter. Monster Brewing continue to face challenges in the fourth quarter and full year. Net sales for the Alcohol Brands segment were $34.9 million in the 2024 fourth quarter, a decrease of approximately $0.3 million or 0.8% lower than the 2023 comparable quarter. In October, the Brevard, North Carolina production and shipping were severely impacted by Hurricane Helene. Production in Brevard normalized in November, while other facilities we utilized during the quarter to allow for a minimal overall disruption. In addition to the appointment of a new President of Monster Brewing announced last quarter, we have now restructured the senior management team in sales, marketing, strategy and operations divisions and will be implementing further adjustments in the coming months with the intent to optimize our personnel and facilities to support the current demands of our portfolio and innovation pipeline. We are currently shipping Beast, Pink Poison and Killer Sunrise in 24 ounce cans and we'll be launching Gnarly Grape in 24 ounce cans in the coming months. Miche, our newest flavored beer innovation will also be launched nationally in the coming months in two 24 ounce flavors, Chelada and Michelada. We are planning to launch the Beast internationally this summer in select markets, subject to regulatory approvals. We are planning for further innovation in Monster Brewing in the coming months. In October 2024, we launched Monster Ultra Vice Guava nationally. The initial response from both customers and consumers alike has been very positive on this innovation. Additionally, during the first quarter of 2025, we launched innovation across various brands, including Monster Energy Ultra Blue Hawaiian, Monster Energy Brew Triple Shot, Killer Brew Triple Shot, Monster Energy Juice Viking Berry, Reign Storm Tropical, Reign White Haze and Bang Energy Sour Ropes. We are planning to launch Bang Energy Any Means Orange next month, which is part of our relationship with the popular content and streaming group Any Means Possible. In Latin America, during the fourth quarter of 2024, we launched Monster Ultra Peachy Keen in Brazil and Monster Zero Sugar in Chile. Additionally, we launched Fury Gold Strike in Ecuador. In EMEA, in the fourth quarter of 2024, we launched Monster juiced or lemonade juiced bad Apple, Juice Mix Punch, Nitro Cosmic Peach, Reserve Orange Dreamsicle, Ultra Fiesta Mango, Burn Guava, Predator Mango Mayhem, Reign Storm Kiwi Blend and Reign Storm Peach Nectarine and Reign Storm Valencia Orange in certain countries in EMEA. Additional launches are planned across all brands throughout EMEA in 2025. During the fourth quarter of 2024, we launched Monster Papillon in Malaysia, and we extended Monster Energy and Monster Ultra in 500 ml can formats in South Korea. Our products are currently sold in 355 ml cans in Korea. In February 2025, we launched Monster Ultra Strawberry Dreams in South Korea. In March, we are planning to introduce Monster Energy in a 250 ml can that contains our regular energy ingredients minus caffeine specifically for the on-premise channel in Japan. Additionally, we remain optimistic about the long-term prospects for the Monster brand in China and India and are excited about the incremental expansion of the Predator brand in these two countries, after positive results in several provinces in China in 2024, we will proceed with the national rollout of non-carbonated predator in 500 ml PET bottles starting next month. As of February 27, 2025, approximately $500 million remained available for repurchase under the previously authorized repurchase program. We estimate that on a foreign currency adjusted basis, including the Alcohol Brands segment, January 2025 sales were approximately 5.3% higher than the comparable January 2024 sales and 6.7% higher than January 2024, excluding the Alcohol Brand segment. We estimate that January 2025 sales on a non-foreign currency adjusted basis were approximately 1.5% higher than the comparable January 2024 sales and 2.8% higher than in January 2024, excluding the Alcohol Brands segment. January 2025 had the same number of selling days as January 2024. We believe January 2025 sales were adversely impacted by the California wildfires, and by other severe weather conditions in the United States, such as the Gulf Coast Blizzard affecting New Orleans in Florida as well as the northeastern ice storms. Our distribution partners warehouses and retail outlets were closed for certain time periods in these areas during January. However, we cannot or have not determined the impact on our business at this time. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules, this affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements which they may alter from time-to-time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. The energy category continues to grow globally. We believe that household penetration continues to increase in the energy drink category. Growth opportunities in household penetration per capita consumption, along with consumers' need for energy or positive factors for the category. We continue to expand ourselves in non-Nielsen measured channels. As reported earlier, we implemented a price increase in the United States on November 1, 2024. We continue to review opportunities for price increases domestically and internationally. Our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. The juice plant at our AFF facility in Ireland has now been completed. After trials, we expect the juice plant to be in production by midyear. We're excited for our 2025 innovation pipeline globally we are currently exploring opportunities for our alcohol products in certain international jurisdictions. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio in a number of markets internationally. We are proceeding with plans for further launches of our affordable energy brands. With respect to the California wildfires, just as with Hurricane Milton and Hurricane Helene, our team has been providing support, water, energy drinks, clothing and other items to the first responders and to local communities impacted by these events. I would now like to open the floor to questions about the quarter and the full year. Thank you. Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Bonnie Herzog with Goldman Sachs. Please go ahead. Bonnie Herzog: All right. Thank you. Hi, everyone. Rodney Sacks: Hi, Bonnie. Bonnie Herzog: Hi. I wanted to ask a question on your gross margins in the quarter. Could you give us a little more color on the drivers behind the expansion? I guess I'm curious how much did the price increase on November 1 help, what about production of some of your feed drink volume in-house. I just wanted to confirm that you did in fact or you are in fact doing that. And then how big of a risk do you see from aluminum and tariffs? Are you still hedged on aluminum? And will this protect you some -- and I know you guys don't guide, but how are you feeling about further gross margin expansion this year in the context of the pricing you took and everything I just asked about? Thanks. Hilton Schlosberg: Yeah. So Bonnie, thank you for that long question. I think it was more than one question. We'll try and answer them. The major drivers of gross margin in the quarter were reduced input costs, partially offset by geographical sales mix. Now there are a lot of other factors that influence gross margin, as you all know. For example, yes, the price increase did impact gross margin positively. But against that, we had other costs that are set off against gross sales, including increased commissions to the Coca-Cola company based on increased sales and increased profitability in EMEA as well as a tranche of other issues. Promotional allowances yes, were higher. Mainly driven by the fact that when one does entertain a price increase, we do ensure that commercial allowances are in place, so that consumers don’t get the sticker shock day one from the price increase. As regards tariffs, I think you all guess is good as mine. Things keep on changing day by day. And I think it would be – I discussed it with some of my colleagues prior to this call, and we think it would be really premature to even talk about tariffs because no one really knows what’s going to happen. However, we are hedged to quite a nice extent in 2025 with aluminum, and we have some hedges on the Midwest premium. Operator: The next question comes from Dara Mohsenian with Morgan Stanley. Please go ahead. Dara Mohsenian: Hi, guys. So clearly, you're enthusiastic about the energy category recovery we're seeing in the U.S. Can you also just give us some color or any thoughts on Monster's potential U.S. market share performance as we look going forward? I know you're not going to be specific, but just relative to a period of compression we've seen in recent periods. And also within that, maybe you can touch specifically on the U.S. innovation pipeline in 2025 versus 2024 and shelf space and how that might play into Monster's U.S. market share performance with that category recovery? Thanks. Hilton Schlosberg: Okay. Rodney and I are going to split this question. So with regard -- let me start with shelf space. We have negotiated for increased shelf space this year and it's in the low-single digits. And we're really excited with the additions to our portfolio that we've been able to attract and increase shelf space. As regards the total category, we spoke at -- in New York about the global energy drink category growing substantially over the next few years to 2019. And I must just remind you that the U.S. category is now $21.2 billion. So it's hard to swing a dial on growth in a $21.2 billion category that we've seen historically. I think we will continue to see increases in the category, and you've seen that in the past few weeks, both the category in all measured channels has grown, the convenience we see as coming back. Trips are still down, but the shopping baskets in convenience are higher. So all-in-all, it all goes well for the category as a whole and for the category in the U.S. As regards market share, and I'll give you my take, we will always see competition. We've seen competition historically and we'll continue to see competition. And that will continue to obviously lean in to both ourselves and to rebuild market share, but there still is a very strong category and it's driven by two players, two major players, which is us and Red Bull. Rodney Sacks: Agreed. And I think the category, we're also seeing growth internationally as well coming back. I mean everybody seems to have had a sort of a flattening of growth in that third quarter, whether it's U.S. or internationally for different reasons, none of us have really can explain it fully, but it certainly is growing, which is really pretty positive. We see this on a week-to-week basis. With regard to 2025 with innovation, we have got off to an early start. I think we've taken measures to try and sort of maximize the impact of our innovation and execution to step that up and we have strategies for that, which we started with Vice Guava. We have followed that up with Ultra Blue Hawaiian, and I'm just looking at the latest week numbers in Ultra Blue Hawaiian is one of the top 10 selling products and it's still gaining distribution. Our juice product, Viking Barry is also on a sales per point has got off to a good start. We've got the coffee category, we've got some good products. So we are actually very positive about innovation for this year. We think it will be positive for us. And we've got off to an early start on them with the bottlers. So, we also have some more innovation that we have planned down in the fall. Particularly, we are quite excited with the Bang relationship with Any Means Possible. We have a single SKU, which we launched with Bang, a new one. But the Any Means possible relationship combined with the flavor and combined with their social media, we think is going to be quite positive. And as you -- Bang is still growing. We are covering nicely and growing. So we are quite positive for that. We're also going to focus on Reign, which, as you know, is really one of two real performance brands at the moment, everybody has moved to different wellness in different areas. So we think that Reign is still a solid brand, and we're also obviously going to put focus and effort behind it. Thanks. Operator: The next question comes from Filippo Falorni with Citi. Please go ahead. Filippo Falorni: Hi. Good afternoon, everyone. I wanted to ask about the U.S. energy drink category. Obviously, we've seen the reacceleration in track channel data, your reported results in the U.S. seem to be tracking a little bit below what we see in the tracked channel data. So maybe can you comment a bit on the untracked portion of your business, if you've seen any slowdown, particularly in the Smaller Bodegas, Gas and Convenience stores that are not picked up. And any comment on the Hispanic population that we've heard from other companies seeing a little bit of pressure more recently? Thank you. Hilton Schlosberg: I think that's what you said about the spending consumers probably really accurate. And I don't want to say anything more about that. As regards to January, and we reported the January numbers, I believe that they were affected significantly by weather. We never really -- we have a saying in this company that we avoid any discussion on whether and when we sell our products come rain and rain and shine. But December was a difficult month. It was a difficult month in terms of the wildfires and it was a difficult month in terms of everything that you saw on the East Coast relating to weather conditions. So January for me was -- I think it was an aberration. Other people may feel otherwise, but that's a personal view. And we've always got to appreciate that we sell to the bottlers and the distributors. They sell to the retailers and Nielsen is a factor of what the consumer buys at retail. So there's never really a -- there should be a correlation some people say, sometimes there is a correlation, often there isn't. But please remember that Nielsen is what the consumers take off at retail and not would we sell, we sell to the boxes. Rodney Sacks: I think that just to reinforce that, I think that if you look at the Nielsens I know they're short periods, we don't like to often refer to them. But if you look at the last couple of weeks on a week-by-week basis, all measured channels, you can see Monster is pretty much got back into a close to an 8% growth rate in the measure, which is are the main areas. So we're seeing some good shoots coming out of after January, there clearly was some effect on the weather and again, as we pointed out previously, I think everybody's got to be cautious about looking at single months. There are other factors that affected. Thanks. Operator: The next question comes from Andrea Teixeira with JPMorgan. Please go ahead. Andrea Teixeira: Thank you for the question, and good afternoon. I just wanted to go back to the -- your comment right on the innovation for Bang and using both Bang and Reign, as you had before for the functional portion of your portfolio. So I was wondering, if you can elaborate a little bit more on your plans for 2025 in terms of innovation in that specific segment, knowing that you called out like the player that was acquired by another -- by the third largest being more niche. So I wonder, how you see that transaction and how could that impact your plans or anything you're seeing from your customers and any feedback that you can share? Thank you. Rodney Sacks: I think everybody knows Alani Nu (ph) had some good growth, and it's doing nicely. But it is very focused on younger female and that it is what it is. The fact of the matter is it is growing. I think that when we talk about Bang, I think it's not directly comparable to aligning new. And I think that in the case of Reign, it's very much more focused on performance category. So I think there are different positionings for these different brands. They're all able to find their own positions. And they will -- we'll continue to compete and see how they grow, but we think that we can distinguish the positioning for Reign from Bang and from NOS even, for example, in our portfolio in Reign Storm. And so we have a portfolio, and we're going to continue to manage them appropriately. We think that the other factors will not really feature. We'll see how the acquisition goes. They'll have to manage two brands, but that's a challenge they will obviously take on, but it's not for us to really comment on that. Hilton Schlosberg: Yeah. And we have our own strategies as you can expect. And Alani Nu will probably continue to grow until they hit their ceiling on points of distribution. A lot of their growth is coming out of new distribution and they'll hit their ceiling on points of distribution. In fact, just like Celsius did. So we carry on, we run our business and we run our play, and we're very confident with the team here at Monster and with the products and the portfolio that we have in the innovation for this year and further innovation that we're working on, and that's coming. Operator: The next question comes from Chris Carey with Wells Fargo. Please go ahead. Christopher Carey: Hey, guys. Hope you're doing well. So there was a comment earlier in the call around potential to take additional pricing or that you're looking at incremental pricing or your always considering incremental pricing, I can't remember exactly how it was said. But can you just talk about the sorts of things that you're looking at in order to make that decision about new pricing. Is that incremental aluminum inflation? Is that tariffs? Are those sorts of decisions already made? New innovation conscious that you made some positive statements around being hedged on aluminum and a bit of Midwest premium, but just trying to contextualize what the -- how that decision process go? And when you would make that sort of decision and how that could all play out? Thanks so much for any context there. Hilton Schlosberg: Sure. We always are looking for opportunities to increase pricing. We've had significant cost increases as everyone appreciates, that's why Bonnie asked the question on gross margin every quarter. And so please remember, we didn't take price on Reign Storm and Bang when we took pricing on the rest of the portfolio in November, there are opportunities there. And internationally, we continue to review pricing as we do with Monster in the U.S. And I think a lot will depend on where these tariffs and duties end up. And frankly, what our competitors do. But we have a very strong focus on trying to improve stockholder wealth, and that includes increasing pricing where there are opportunities to do so. However, we're not going to disadvantage our brands by increasing prices unnecessarily. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Rodney Sacks for any closing remarks. Rodney Sacks: Thanks. 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 remain committed to continuing to innovate, develop and differentiate our brands and to expand the company both at home and abroad and in particular, capitalizing on our relationship with the Coca-Cola bottling system. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. Thanks very much for your attendance. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good evening, and welcome to the Monster Beverage Company Third Quarter 2024 Conference Call. All participants are in 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 and Mr. Hilton Schlosberg, Co-CEOs. Please go ahead. Rodney C. Sacks: Thank you. Good afternoon, ladies and gentlemen. Thanks for attending this call. I’m Rodney Sacks, Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer. He is also on the call, as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our caution restatement. Thomas J. Kelly: 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 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 February 29, 2024, and quarterly reports on Form 10-K, 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 obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would also like to note that an explanation of the non-GAAP measures, which may be mentioned during the course of this call, is provided in the notes in the condensed consolidated statements of income and other information attached to the earnings release dated November 7, 2024. A copy of this information is also available on our website at www.monsterbevcorp.com in the Financial Information section. I would now like to hand the call over to Rodney Sacks. Rodney C. Sacks: Thanks, Tom. The energy drink category continues to grow globally and has demonstrated resilience. In the United States, the energy drink category continued to experience slower growth rates. However, in all measured channels, excluding convenience, the energy drink category is growing at a faster rate. In the United States, the energy drink category in the convenience channel is beginning to show some improvement in October. Although, we do not normally refer to one-week Nielsen statistics and do not intend to do so on an ongoing basis, I think that it is noteworthy to mention that according to Nielsen, for the one-week ended October 26, 2024, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots increased by 3.7% versus the same period a year ago, while sales of the Company’s energy brands including Bang were up 2.9% and sales of Monster were up 2.2%. A number of other consumer packaged goods companies have also seen a tighter consumer spending environment for certain income groups and weaker demand in the quarter. Hurricanes Helene and Milton impacted sales at retail in certain states in September and October, 2024. However, we cannot determine the impact on our business. The alcohol segment operates a brewery in Brevard, North Carolina, which was closed for a week due to flooding from Hurricane Helene. This brewery is partially operational and is expected to be fully operational by mid November 2024. We believe that many consumers view energy drinks as an affordable luxury. Growth opportunities in household penetration and per capita consumption along with consumers growing need for energy are positive trends for the category. In EMEA, the energy drink category according to Nielsen for the recently reported 13-week periods for our tracked markets, which differ from country-to-country is growing at approximately 11.1% versus the same period last year on an FX neutral basis. In APAC, for our tracked markets, the energy drink category according to Nielsen and INTAGE for our tracked markets for the 13-week period ending September 2024 is growing at approximately 13.6% versus the same period last year also on an FX neutral basis. In LatAm, for our tracked markets, the energy drink category according to Nielsen for the recently reported 13-week periods, which differ from country-to-country is growing at approximately 21.1% versus the same period last year, again also on an FX neutral basis. Gross profit for the 2024 third quarter was adversely impacted by an increase in inventory reserves, due to excess inventory levels in the Alcohol Brands segment of $10.6 million, which I will refer to later in this call as the Alcohol Brands inventory reserves. Operating expenses for the 2024 third quarter were adversely impacted by a $16.7 million provision and $1.2 million of Company incurred legal expenses in connection with an intellectual property claim brought by the descendants of Hubert Hansen in relation to the Company’s use of the Hubert Hansen name prior to the transaction with the Coca-Cola Company, which closed in 2015. And, I will also refer to this later this call as the intellectual property claim. Net of tax, these items adversely impacted net income for the 2024 third quarter by $21.5 million and net income per diluted share by $0.02 per share. Diluted earnings per share on a pro forma basis for the 2024 third quarter adjusted for these items was $0.40 per share. On July 31, 2023, the Company completed its acquisition of substantially all of the assets of Vital Pharmaceuticals Inc. and its debtor affiliates. Inventory purchased as part of the Bang Transaction was recorded at fair value, which I will refer to as the Bang Inventory Step-Up. Certain of the purchased inventory was subsequently sold in the 2023 third quarter and was recognized through cost of sales at fair value. Gross profit was negatively impacted by approximately $7.8 million during the 2023 third quarter as a result. During the 2023 third quarter, in connection with the Bang Transaction, the Company recorded a gain of $45.4 million in interest and other income. During the 2023 third quarter, the Company incurred approximately $8 million of acquisition costs related to the Bang Transaction. Net of tax, these items positively impacted net income for the 2023 third quarter by $22.7 million and net income per diluted share by $0.02 per share. Diluted earnings per share on a pro forma basis for the 2023 third quarter adjusted for these items was $0.41 per share. In addition to our GAAP condensed consolidated statement of income and other information and our GAAP condensed consolidated balance sheet for the Company for the quarter ended September 30, 2024 attached to our press release is a non-GAAP adjusted condensed consolidated statement of income and other information adjusting for the items impacting profitability and a reconciliation of GAAP and non-GAAP information. We believe that these non-GAAP items are useful to shareholders on this call in evaluating our ongoing operating and financial results. These non-GAAP items should be considered in addition to and not in lieu of U.S. GAAP financial measures. The Company achieved record third quarter net sales of $1.88 billion in the 2024 third quarter or 1.3% higher than net sales of $1.86 billion in the comparable 2023 quarter, 4.7% higher on a foreign currency adjusted basis. Net sales on a foreign currency adjusted basis excluding the Alcohol Brand segment increased 5% in the 2024 third quarter. Gross profit as a percentage of net sales in the 2024 third quarter was 53.2%, compared with 53% in the 2023 third quarter. Gross profit for the 2024 third quarter was adversely impacted by the Alcohol Brands inventory reserves. Gross profit as a percentage of net sales for the 2024 third quarter, exclusive of the Alcohol Brands inventory reserves, was 53.7%. The increase in gross profit as a percentage of net sales for the 2024 third quarter was primarily the result of lower input costs, pricing actions in certain international markets, and the Bang Inventory Step-Up, partially offset by higher promotional allowances as a percentage of net sales, mainly to drive trial and awareness of the Bang Energy brand in the United States, as well as the Alcohol Brands inventory reserves. On a sequential quarterly basis, adjusted gross margins were higher than the 2024 second quarter gross margins. Operating expenses for the 2024 third quarter were $519.9 million compared to $473.2 million in the 2023 third quarter. The increase in operating expenses were primarily the result of increased payroll expenses, increased sponsorship and endorsement expenses, as well as the intellectual property claims. As a percentage of net sales, operating expenses for the 2024 third quarter were 27.6%, compared with 25.5% in the 2023 third quarter. Adjusted operating expenses after making the adjustments described earlier increased 8% to $502 million as compared to $464.8 million in the 2023 comparable quarter. Distribution and warehouse expenses for the 2024 third quarter were $82.7 million or 4.4% of net sales compared to $85.7 million or 4.6% of net sales in the 2023 third quarter. Operating income for the 2024 third quarter decreased 6% to $479.9 million from $510.5 million in the 2023 comparative quarter. Adjusted operating income after making the adjustments described earlier decreased 3.5% to $508.4 million as compared to $526.8 million in the 2023 comparable quarter. The effective tax rate for the 2024 third quarter was 21.8%, compared with 22.2% in the 2023 third quarter. Net income decreased 18.1% to $370.9 million as compared to $452.7 million in the 2023 comparable quarter. Adjusted net income after making the adjustments described earlier, decreased 8.8% to $392.4 million as compared to $430 million in the 2023 comparable quarter. Diluted earnings per share for the 2024 third quarter decreased 11.7% to $0.38 from $0.43 in the third quarter of 2023. Adjusted diluted earnings per share after making the adjustments described earlier decreased 1.6% to $0.40 per share as compared to $0.41 per share in the 2023 comparable quarter. Our third quarter financial results were again impacted by unfavorable foreign currency exchange rates in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2024 third quarter of $62.8 million. We estimate that diluted earnings per share were adversely impacted by approximately $0.03 per share due to the unfavorable foreign currency exchange rates. As previously reported, we have taken a 5% increase on our brands and packages, excluding Bang, Reign, and Reign Storm, effective November 1, 2024 in the United States. We are continuing to monitor opportunities for further pricing actions in our international markets. The Company continues to have market share leadership in the energy drink category for all outlets combined in the United States for the 13-week period ended October 26, 2024. According to the Nielsen reports for the 13-weeks through October 26, 2024, all outlets combined excluding convenience, sales in dollars in the energy category, including energy shops increased by 4.9% versus the same period a year ago. According to the Nielsen report for the 13-weeks through October 26, 2024, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category including energy shots increased by 1.9% versus the same period a year ago. Sales of the Company’s energy brands including Bang were down 0.6% in the 13 week period. Sales of Monster declined 1.8%. Sales of Reign were down 2.9%. Sales of NOS increased 2.9% and sales of Full Throttle decreased 5.4%. Sales of Red Bull increased 5%. According to Nielsen, for the four-weeks ended October 26, 2024, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars increased 1.5% over the same period the previous year. Sales of the Company’s energy brands including Bang were flat in the latest four-week period in the convenience and gas channel. Sales of Monster decreased by 1.6% over the same period versus the previous year. Reign sales decreased 4.4%, NOS was up 3.9%, and Full Throttle was down 4.4%. Sales of Red Bull were up 5.6%. According to Nielsen, for the four-weeks ended October 26, 2024, the Company’s market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased from 37.3% to 36.8%, including Bang. Monster’s share decreased from 29.7% a year ago to 28.7%. Reign share decreased 0.2 of a share point to 2.8%. NOS’s share increased 0.1 of a share point to 2.6% and Full Throttle share remained at 0.7%. Bang’s share was 1.9%. Red Bull share increased 1.4 share points to 35.9. Market share of certain competitors were as follows: CELSIUS 7.7, C4 3.4, 5-Hour 3.1, Rockstar 2.8 and GHOST 3.1. According to Nielsen, for the four-weeks ended October 26, 2024, sales in dollars in the Coffee + Energy Drinks category, which includes our Java Monster line in the convenience and gas channel, decreased 7.9% over the same period the previous year. Sales of Java Monster, including Java Monster 300 were 3% lower in the same period versus the previous year. Sales of Starbucks Energy were 14.8% lower. Java Monster’s share of the Coffee + Energy Drinks category in the four-weeks ended October 26, 2024 was 58.6%, up three points, while Starbucks Energy’s share was 40.8%, down 3.3 points. According to Nielsen, in all measured channels in Canada, for the 12-weeks ended October 5, 2024, the energy drink category increased 7.7% in dollars. Sales of the Company’s energy drink brands increased 8.3% versus a year ago. The market share of the Company’s energy drink brands increased 0.2 of a point to 40.7%. Monster sales increased 3.9% and its market share decreased 1.3 points to 35%. NOS’s sales increased 16.2% and its market share increased 0.1 of a share point to 1.3%. Full Throttle sales decreased 3.5% and its market share decreased 0.1 of a point to 0.05%. According to Nielsen, for all our efforts combined in Mexico, the energy drink category increased 16.3% for the month of September 2024. Monster sales increased 11.3%. Monster’s market share in value decreased 1.3 points to 27.6% against the comparable period the previous year. Sales of Predator increased 18.6% and its market share increased 0.1 of a share point to 6.2%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and or negatively by sales in the Oaxaca convenience chain, which dominates the market. Sales in the Oaxaca convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for all outlets combined in Brazil, the energy drink category increased 19.9% for the month of September 2024. Monster sales increased 28%. Monster’s market share in value increased 3.1 points to 48.2%, compared to September 2023. In Argentina, due in part to the impact of inflation related local currency price increases, the energy drink category increased 202.5% for the month of September 2024. Monster sales increased 182.5%. Monster’s market share in value decreased 3.8 points to 53%, compared to September 2023. In Chile, the energy drink category increased 11.7% for the month of September 2024. Monster sales increased 12.9%. Monster’s market share in value increased 0.5 point to 40.3%. Monster Energy remains the leading energy brand in value in Argentina, Brazil, and Chile. I would like to point out the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen, in the 13-week period ending October 6, 2024, Monster’s retail market share in value as compared to the same period the previous year grew from 31% to 32.8% in Great Britain, from 5.6% to 7.9% in the Netherlands, and from 40.2% to 40.4% in Spain. According to Nielsen, in the 13-week period ending October 6, 2024, Monster’s retail market share in value as compared to the same period the previous year declined from 16.4% to 16.3% in Belgium, from 30.2% to 27.1% in France, and from 35.4% to 34.2% in Norway. According to Nielsen, in the 13-week period ending September 30, 2024, Monster’s retail market share in value as compared to the same period the previous year declined from 18.3% to 17.9% in Germany. According to Nielsen, in the 13-week period ending September 8, 2024, Monster’s retail market share in value as compared to the same period the previous year grew from 18.6% to 19.8% in Poland and from 30% to 31.1% in the Republic of Ireland. According to Nielsen, in the 13-week period ending September 8, 2024, Monster’s retail market share in value as compared to the same period the previous year declined from 16% to 15.2% in Sweden. According to Nielsen, in the 13-week period ending August 31, 2024, Monster’s retail market share in value as compared to the same period the previous year declined from 38.2% to 36% in Greece and from 31.8% to 30.9% in Italy. According to Nielsen, in the 13-week period ending August 25, 2024, Monster’s retail market share in value as compared to the same period the previous year grew from 18.3% to 18.8% in South Africa. According to Nielsen, in the 13-week period ending August 11, 2024 Monster’s retail market share in value as compared to the same period the previous year remained flat at 21.7% in the Czech Republic. According to Nielsen, in the 13-week period ending August 11, 2024, Monster’s retail market share in value as compared to the same period the previous year declined from 28% to 27.1% in Denmark. According to Nielsen for the 13-week period ending August 23, 2024, the retail market share of Predator also branded Fury in certain markets in value as compared to the same period the previous year grew from 4.3% to 8.5% in Egypt, from 32.8% to 38.8% in Kenya, and from 20.3% to 22.6% in Nigeria. Combining our markets in EMEA for the last 13-weeks, the energy category has grown 11.1%. Of note, for the same period, the category in our Western European markets grew 6.2%, our Eastern European markets grew 4.2%, and our Africa and Middle East markets grew 27.5%. According to IRI for all outlets combined in Australia, the energy drink category increased 8.7% in the four-weeks ending October 20, 2024. Monster sales increased 19.9%. Monster’s market share in value increased 1.8 points to 19.1% against the comparable period the previous year. Sales of Mother increased 4.5% and its market share decreased by 0.4 of a share point to 10.1%. According to IRI for all outlets combined in New Zealand, the energy drink category increased 11.9% for the four-weeks ending October 20, 2024. Monster’s sales increased 11.7%. Monster’s market share in value remained at 13.2% against the comparable period the previous year. Sales of Mother decreased 12.2% and its market share decreased 1.4 share points to 4.9%. Sales of Live+ increased 1.5% and its market share decreased 0.5 of a share point to 4.6%. According to INTAGE, in the convenience channel in Japan, the energy drink category increased 6.6% for the month of September 2024. Monster sales increased 5.6%. Monster’s market share in value decreased to 0.5 share point to 58.4% against the comparable period the previous year. According to Nielsen, all outlets combined in South Korea, the energy drink category increased 28.3% for the month of September 2024. Monster sales increased 31.3%. Monster’s market share in value increased 1.2 points to 53.1% against the comparable period the previous year. We again put out that certain market statistics that cover single months or four-week periods may often be materially influenced positively and or negatively by promotions and other trading factors during those periods. Net sales to customers outside the U.S. were $760.1 million 40.4% of total net sales in the 2024 third quarter, compared to $733.7 million or 39.5% of total net sales in the corresponding quarter in 2023. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $62.8 million in the 2024 third quarter, of which $26.5 million related to Argentina. In EMEA, net sales in the 2024 third quarter increased 6.8% in dollars and increased 10.4% on a currency neutral basis over the same period in 2023. In EMEA, our sales were impacted by bottler retailer disruptions in certain key accounts in Western Europe, as well as supply disruptions in South Africa. These disruptions reduced dollar sales by an estimated 2.9% in EMEA in the quarter. Gross profit in this region as a percentage of net sales for the 2024 third quarter was 35.4% compared to 31.1% in the same quarter in 2023. We are pleased that in the 2024 third quarter Monster gained market share in Great Britain, the Netherlands, Poland, Republic of Ireland, South Africa and Spain. In Asia Pacific, net sales in the 2024 third quarter increased 4% in dollars and increased 8.8% on a currency neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales for the 2024 third quarter was 40.2% versus 43.2% in the same period in 2023. Net sales in Japan in the 2024 third quarter decreased 7.6% in dollars and increased 0.2% on a currency neutral basis. In South Korea, net sales in the 2024 third quarter decreased 8% in dollars and decreased 2.2% on a currency neutral basis as compared to the same quarter in 2023, largely due to the timing of production schedules this year. Monster remains the market leader in Japan and South Korea. In China, net sales in the 2024 third quarter increased 15.4% in dollars and increased 15.8% on a currency neutral basis, as compared to the same quarter in 2023. We remain optimistic about the long-term prospects for the Monster brand in China and are excited about the recent launch of Predator, which is being rolled out to additional markets in China later this year and during 2025. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 13.5% in dollars and increased 13.8% on a currency neutral basis. In Latin America, including Mexico and the Caribbean, net sales in the 2024 third quarter decreased 5% in dollars and increased 20.1% on a currency neutral basis over the same period in 2023, 4.1% exclusive of Argentina’s impact. Gross profit in this region as a percentage of net sales was 42.2% for the 2024 third quarter versus 37.7% in the 2023 third quarter. In Brazil, net sales in the 2024 third quarter increased 16.7% in dollars and increased 33.3% on a currency neutral basis. Net sales in Mexico decreased 1.9% in dollars and increased 6.1% on a currency neutral basis in the 2024 Q3. Net sales in Chile decreased 4.4% in dollars and increased 8.8% on a currency neutral basis in the 2024 third quarter, due to challenging economic conditions in the country. Our market share in the quarter increased 40.8%. Net sales in Argentina decreased 56.5% in dollars and increased 48.5% on a currency neutral basis in the 2024 Q3. We remain the market share leader in Argentina and our market share in the quarter is 55.1%. Monster Brewing had a challenging third quarter. Net sales for the Alcohol Brand segment were $39.8 million in the 2024 third quarter, a decrease of approximately $2.5 million or 6% lower than the 2023 comparable quarter, mainly as a result of lower sales of craft beers. In addition, as mentioned earlier, due to excess inventories of certain Monster Brewing brands, it was necessary to increase inventory reserves in that segment by $10.6 million. In addition to the appointment of a new President of Monster Brewing announced last quarter, we have now restructured the Senior Management team in the alcohol division and are continuing to consolidate production facilities to maximize efficiencies. The Beast Unleashed was rebranded to The Beast. The brand is now available in all 50 states through a network of beer distributors. The Beast was launched in the State of Utah in July. We are currently launching our second variety pack of The Beast in 12 packs, which includes Mean Green and three new flavors Pink Poison, Gnarly Grape and Killer Sunrise. The Beast Variety Pack 2 is currently available in 48 states. The Jai Alai IPA brand, family’s first major refresh since 2017 is now shipping to all available markets. Oskar Blues first non-alcoholic brew designated Dale’s will be available next month in select markets. We launched Monster Energy Ultra Vice Guava in the United States in October 2024. Initial response from customers and consumers alike has been very positive on this innovation. In Latin America, during the Q3 of 2024, we launched Monster Ultra Peachy Keen in Mexico, Monster Ultra Paradise in Peru, Monster Zero Ultra and Juice Monster Mango Loco in the Dominican Republic and Juice Monster Pipeline Punch in Costa Rica. In Australia, during the third quarter of 2024, we launched Monster Ultra Violet. In EMEA in the third quarter of 2024, we launched Monster Reserve, Orange Dreamsicle, Juiced Aussie Lemonade, Juiced Bad Apple, Juiced Mango Loco, Ultra Black, Ultra Golden Pineapple, Ultra Peachy Keen, Ultra Rosa, Ultra Strawberry Dreams, and Ultra White in a number of countries. Additional launches are planned across all brands throughout EMEA in 2024. During the third quarter of 2024, we launched Papillon in a 500 ml aluminium bottle in Japan and Ultra Peachy Keen in Singapore. In China, we expanded the launch of Predator Gold Strike, which was launched in 11 provinces in China at the end of April in a non-carbonated 500 ml PET bottle. We launched in two additional provinces Guangxi and Fujian in September. We are planning to launch Predator in a number of additional provinces in 2025. In India, we extended the Predator Gold Strike carbonated 250 ml PET bottle beyond the Delhi region to the Northeast states in July and Madhya Pradesh in September. We will continue adding additional states in 2025. We remain optimistic about the long-term prospects for the Monster brand in China and India and are excited about the expansion of Predator in these two countries. During the 2024 third quarter, the company purchased approximately 11.3 million shares of its common stock at an average purchase price of $47.32 per share for a total amount of $534.7 million. As of November 6, 2024, approximately $500 million remained available for repurchase under the previously authorized repurchase program. We estimate that October 2024 sales were approximately 4.8% higher than the comparable October 2023 sales and 5% higher than October 2023, excluding the Alcohol Brand segment. We estimate that on a foreign currency adjusted basis, including the Alcohol Brand segment, October 2024 sales were approximately 5.8% higher than the comparable October sales and 6.1% higher than October 2023, excluding the Alcohol Brand segment. October 2024 had one more selling day compared to October 2023. On our third quarter conference call in November 2023, we reported that gross sales in the month of October 2023, including the alcohol segment, were approximately 24.8% higher than October 2022 gross sales, which presented a high hurdle rate for the company this year. October 2023 had one more selling day than October 2022. A portion of the increase in the October 2024 sales may be attributed to advanced purchases by our customers in anticipation of the price increase in November in the United States. However, such amounts cannot reasonably be determined. Hurricanes Helene and Milton impacted sales at retail in certain states in September October 2024. Again, however, we cannot determine the impact on our business at this time. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors, such as for example selling days, days of the week in which holidays fall, timing of new product launches and timing of price increases and promotions in retail stores, distributing centers, as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. Firstly, the energy category continues to grow globally. We believe that household penetration continues to increase in the energy drink category. Growth opportunities in household penetration per capita consumption, along with consumers’ need for energy, are positive factors for the category. We continue to expand our sales in non-Nielsen measured channels. As reported earlier, we’ve implemented a price increase in the United States on November 1, 2024. We continue to review opportunities for price increases internationally. Our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. The juice plant at our AFF facility in Ireland has now been completed. After trials, we expect the juice plant to be in production in early 2025. We’re excited for the launch of Monster Ultra Vice Guava. The Call of Duty unpacked gaming promotion, which kicked off last month, has received positive consumer response, with the publishers reporting that it’s the biggest Call of Duty release in the franchise’s history. We are currently exploring opportunities for our alcohol products in certain international jurisdictions. We are seeing some acceleration in the sales and market share of Bang Energy and remain excited for the future of this brand within our overall product portfolio. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio in a number of markets internationally. We are proceeding with plans for further launches of our affordable energy brands. I would like to now open the floor to questions about the quarter. Thank you. Operator: Thank you. [Operator Instructions]. Your first question comes from Andrea Teixeira with JPMorgan. Andrea Teixeira: Thank you. Good afternoon, everyone. Rodney C. Sacks: Hi Andrea. Andrea Teixeira: I want to just go back to the expectation of the flow through from pricing and how much you had to deal back on that? And how is your view on the state of the energy drink category given what’s happening in particular now with October understandably, but one extra selling day, it might be a little soft from what I think investors would expect. So, I would appreciate your views on both. Thank you. Thomas J. Kelly: Yes. So, Andrea, when we have a price increase, we have to see where that price increase settles. And once we see a price increase settle and determine in what direction it’s heading, what the elasticity of demand is, we are then in a better position to determine what promotional activity, if any, needs to be set against the brands. So, it’s a really difficult question to answer at this time. Rodney C. Sacks: I think Andrea had a couple of other questions. Do you want to quickly go through your other questions, Andrea? Andrea Teixeira: Thank you, Hilton. Yes, I was just saying if there is any pull forward that you saw, so that it would inform some of that. I mean, I would say October would have been stronger if that’s the case. Would you say there was any pull forward for the pricing? In other words, like the retailers would take in more inventory ahead of the pricing? Rodney C. Sacks: Okay. So, we sell to the distributors, right, the Coca Cola distributors. And we allow them a certain amount that they can buy in and we cut off the old pricing in the middle of October. So, I’m not sure and we’ve looked at it and we cannot determine with reasonable certainty what if any of that increase was attributable to buy ins. I suspect there could have been some, but we just can’t determine that. And in the same vein, it’s hard to determine what the impact of the hurricanes were Milton and Helene were on the business. We know that at retail it was impacted and we’ve done some work to try and assess the extent to which our own business could have been impacted. But again, it’s difficult to determine. What we can say is that, if you look at the territories that were impacted by the hurricanes, both of them, there’s probably a 1% differential between Nielsen activity in those territories and the activity through the U.S. So, there definitely was an impact. But again, we can’t determine the impact on our business. Andrea Teixeira: And then in terms of state of the union for the energy category as we stand right now, I’ll be appreciative of knowing your view. Rodney C. Sacks: Well, if we look at foot traffic in convenience, convenience is 62% of the Nielsen category for energy drinks. And we look at foot traffic and we talk to our retailers we get some input from third party market research companies and refer to the one anecdotal week that we spoke about earlier on this call. I think we have and it’s again a personal view, I think we’ve reached the bottom and are very close to the bottom. And I think here in Monster anyway, we actually feel good about things coming back. I mean, we saw what happened today that there was a rate cut. The election is over, which probably will give consumers bigger better confidence whichever party got in. I think there was some concern about the election. Now it’s over. We’ve passed that. We’ve got a rate cut today. And what we’ve seen in our industry is that there hasn’t been a change in consumer preferences and a change to different types of drinks. Our consumers have stayed with energy drinks and instead of, we believe instead of drinking three a week or four a week, they’ve been drinking one or so less. Andrea Teixeira: Okay, helpful. Thank you. Thomas J. Kelly: Yes, I think it is quite noteworthy. If you look at we started the Nielsen for the period ended 26 October. If you look at the latest 13 week period, the category was up 1.9. You look at the latest 14 weeks, the whole category in general was up 3.2 and the latest week is 3.7. So that trend has been and that’s why we refer to it. We think there is some recovery trend there, but we’ll have to wait and see with how that pans out. Rodney C. Sacks: Yes. And then just getting back to October very quickly, we did mention on the call, we had a really high hurdle rates over last year. So, that’s another factor to bear in mind when you look at the October increases, which I thought were actually quite good. Operator: Your next question comes from Chris Carey with Wells Fargo Securities. Christopher Carey: Hey, guys. Thanks for the question. Can you just maybe touch on how you see inventory levels or how you saw inventory levels going into October? And really what I’m getting at here is, is it just a comp or because you sound quite good on consumption trends, but maybe distributors were still a bit reticent to take on more inventory. And now that the consumption is coming through, perhaps do you feel there could be a resumption into the remainder of the quarter? Because I think basically what’s getting contemplated right now is if you’re kind of running flattish for the quarter, excluding the extra day or if this is just comp and the consumption trends should start to show through in your numbers as well. So any comment there would be maybe helpful. Rodney C. Sacks: Yes, happy to do that, Chris. The way our business works, we sell to the Coke distributors. They place orders and we execute those orders. So, they have sophisticated systems that take into account consumption. That’s one of the factors, weather another factor and a whole bunch of other factors and they order product that we deliver. So, we also have a some we have a small direct business and we’ve spoken about the non-measured channels, which is done directly by us. But generally, we execute orders according to customer requirements. So, some of our competitors have hiccups in inventory. We don’t our business doesn’t behave in that way. We supply orders according to what our customers order. Operator: Your next question comes from Filippo Falorni with Citi. Filippo Falorni: Hi, good afternoon, guys. I wanted to ask about just your comment about the improvement in the category in October. How much do you think innovation plays a role as well? You sounded excited about the Vice Guava. Just general thoughts of if you think innovation can also drive further acceleration into the U.S. category as you think into October and the balance of the year? Thank you. Rodney C. Sacks: Look, I think innovation does drive some consumption, but we’ve had innovation. We had probably three or four new innovative products in the first half of the year. We only really started to get product on shelf on our latest innovation which is one SKU sort of towards the end of October. So yes, there has been some benefit from that if you take the one week numbers. But I think overall, I don’t think it has that has had much impact. I think the overall impact that we’re seeing across a number of our other SKUs is also been trending sort of upwards as well. We see the South point just moving in a better direction. So, again, a short period of time doesn’t make a whole summer. But at the end of the day, we do start feeling because everybody’s been seeing the slower traffic and the sort of this little bit of stagnation in the category. But we do see signs of it starting to re-emerge and consumers being able to go back into stores and not buying again. Thomas J. Kelly: Yes. I mean, we said earlier, we believe the overall macroeconomic conditions are improving and that’s positive. And the foot traffic inconvenience, I think that’s another factor. As I mentioned earlier, we get third party research. We talk to our customers and that’s all positive. So, add that to this equation, and I think you’ll maybe come out with the kind of answer that we’re thinking about here as well. Operator: Your next question comes from Mark Astrachan with Stifel. Mark Astrachan: Yes. Hey, guys. Good afternoon. Hope all is well. Rodney C. Sacks: Hi, Mark. Mark Astrachan: I wanted to ask about gross margin in EMEA. I know it’s sort of specific, but it’s one of those questions that I think a lot of people are curious about and don’t have a huge amount of color. The trends have really improved over the last couple of years, but you’re still decently below 2022 levels or 2021 levels, I should say. I guess the question is without asking for guidance because I know you don’t want to give it, what do we think about from here? I mean, is it reasonable to think that you can get back to 2021? And if you don’t want to specifically answer that, what are the trends that have led to the improvement in that region from a gross margin standpoint? And how sustainable are they? Hilton H. Schlosberg: Well, we have taken price. And we’ve taken price historically in a number of international markets and we continue to examine opportunities to do so. The cost of production and the cost of raw materials, there have been increases over time and significantly increases since COVID. We’re doing our very best to manage and hedge aluminium exposure, which is obviously a big cost in this company. So, we use a ladder, which we may have spoken about on previous calls, but if we didn’t, I’ll talk about it now. We have a ladder strategy, where we execute hedges to assist in managing aluminium exposure, and we really do examine that on a weekly basis or semi twice a month. So, that’s something that we look at. So, all in all, we have a business that is focused some in the U.S. you heard about the numbers overseas, which are growing and they have lower margins, although we spoke about the EMEA margins on this call that have moved up in the quarter, which is the trend we are looking to achieve. And then we have alcohol, which is currently is at a lower margin lower percentage margin than the rest of the business. So, we here are very focused on improving margin wherever we can and we will not stop in that pursuit. But it’s something that we’re carrying on working on and it’s a work in progress. Rodney C. Sacks: Just to mention, I think you referred to EMEA largely. If you look at the last four quarters, we’ve been margins have continued to improve each quarter. Are you still about the whole company? I thought you talked about EMEA. Mark, what are you talking about? Mark? I’ll just give Mark comes out really relative to EMEA. So, I’ll just complete that to say that we do have the juice plant coming into production pretty much early next year. And together with the measures Hilton has indicated I think that we’ll see we’ve sort of got positive about the EMEA improving in margin going forward and whether it can get back to 2021, I’m not sure. So sorry, one was a question about the overall margin and I just sort of focused on EMEA. That’s good. Operator: Thank you. Your next question comes from Peter Grom with UBS. Peter Grom: Thanks, operator. Good afternoon, everyone. Rodney C. Sacks: Hey Peter. Peter Grom: I guess, I just wanted to go back to the advanced purchases. I get it’s a lot of moving pieces and the hurricane noise probably makes it harder. But I think back in 2018 when you did the November price increase, you were at that point at least able to estimate the impact from advanced purchases ahead of the price increases. I’m just curious, is there a reason why this time may be different and you’re not able to kind of estimate that? And then just on gross margin, obviously, you would love some perspective on the path from here. You kind of alluded to it here. But can you maybe just talk about what you’re seeing from a commodity perspective and kind of how you see inflation evolving from this point? Thanks. Hilton H. Schlosberg: Okay. Where we want to start. You want to start about commodities or advanced purchases? Peter Grom: Whatever you want. Hilton H. Schlosberg: Okay. All right. We have the option. So, I think the difference this time versus the previous price increase was that we cut off our price increase the favorable price increase mid-October. So with any customer who purchased product after mid-October, they actually paid the higher price. So, as we look at the whole structure, everything that happened in October, it’s really it became a very difficult exercise to determine what, if any of the price increase could have impacted October sales. So, that’s the bottom line. If we could have done a better exercise, we would have, but it became too secured as to try and find a sensible answer. So, we’d rather not give it and we’ll see the impact on the quarter when the quarter is over. And then in commodities, I think everybody knows that what’s happening with aluminium. And I mentioned the extent that we have a ladder approach and we build up that ladder as time goes by. There’s already a tariff on aluminium and we’re hoping that the tariff will not increase, but there is already a tariff on aluminium. And as regards some of our other commodities, we have seen increases in some and we’ve seen decreases in other. We buy a lot of commodities and it’s really it’s going to take us five minutes to go through them all. But what I can say is that generally we are seeing increases and in certain commodities like for example, aluminium, like for example, sugar and there are other commodities that have stayed the same or minimally decreasing. So, the climate that we’re looking at for commodities is one of taking aluminium out of the picture, which is showing significant increases, is one of relatively manageable factors in increases. Operator: Thank you. I would like to turn the conference back over to Mr. Rodney Sacks for any closing remarks. Rodney C. Sacks: Thank you. On behalf of Monster, I would like to thank everyone for their continued interest and support of the company. We continue to believe in the company and our growth strategy and remain committed to continuing to innovate, to develop and differentiate our brands and to expand the company both at home and abroad. And in particular, capitalizing on our relationship with the Coca Cola bottler system. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain safe and healthy. Thank you very much for your attendance. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator: Good afternoon, everyone, and welcome to the Monster Beverage Company Second Quarter 2024 Conference Call. [Operator Instructions] Please also note this event is being recorded. At this time, I'd like to turn the floor over to Co-CEOs, Rodney Sacks and Hilton Schlosberg. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thanks for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Thomas Kelly: 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 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. 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 29, 2024 and quarterly reports on Form 10-Q, 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 obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thanks, Tom. The energy drink category in the United States and in certain other countries experienced lower growth rates in the second quarter. Retailers have reported a reduction in convenience store foot traffic and we have seen a shift in retail towards more mass and dollar channels. Other beverage and consumer packaged product companies have also seen a tighter consumer spending environment and weaker demand in the quarter. The energy category globally continues to grow and has demonstrated resilience as we believe that consumers view energy drinks as an affordable luxury. We believe that household penetration continues to increase in the energy drink category. Growth opportunities in household penetration per capita consumption, along with consumers' need for energy or positive factors for the category. We continue to expand ourselves in non-Nielsen measured channels. The company achieved record second quarter net sales of $1.9 billion in the 2024 second quarter or 2.5% higher than net sales of $1.85 billion in the comparable 2023 quarter, 6.1% higher on a foreign currency adjusted basis, 4.3% exclusive of Argentina's impact. Net sales on a foreign currency adjusted basis, excluding the alcohol brands segment increased 7.4% in the 2024, second quarter. Gross profit as a percentage of net sales for the 2024 second quarter was 53.6% compared with 52.5% in the 2023, second quarter. The increase in gross profit as a percentage of net sales for the 2024 second quarter as compared to the 2023 second quarter was primarily the result of decreased freight-in costs, pricing actions in certain markets and lower aluminum can costs partially offset by production inefficiencies. On a sequential quarterly basis, gross margins were 0.5% below 2024 first quarter margins, primarily as a result of higher allowances certain of which we believe are nonrecurring as well as production inefficiencies. Operating expenses for the 2024 second quarter were $492.3 million, compared with $450.4 million in the 2023 second quarter. The increase in operating expenses were primarily the result of increased sponsorship and endorsement expenses, increased payroll expenses and increased storage and warehouse expenses. As a percentage of net sales, operating expenses for the 2024 second quarter were 25.9%, compared to 24.3% in the 2023 second quarter. Distribution and warehouse expenses for the 2024 second quarter were $87.4 million or 4.6% of net sales compared to $82 million or 4.4% of net sales in the 2023 second quarter. Operating income for the 2024 second quarter increased 0.6% to $527.2 million from $523.8 million in the 2023 comparative quarter. The effective tax rate for the 0.6%, 2024 second quarter was 22.9% compared to 23.2% in the 2023 second quarter. Net income increased 2.8% to $425.4 million as compared to $413.9 million in the 2023 comparable quarter. Diluted earnings per share for the 2024 second quarter increased 5% to $0.41 from $0.39 in the second quarter of 2023. As previously reported, we will be taking an approximately 5% price increase on our core brands and packages effective November 1, 2024, in the United States. We are continuing to monitor opportunities for further pricing actions. The company continues to have market share leadership in the energy drink category for all outlets combined in the United States for the 13-week period ended July 2, 2024. According to the Nielsen reports for the 13 weeks through July 20, 2024, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 0.6% versus the same period a year ago. Sales of the company's energy brands, excluding Bang were down 2.5% in the 13-week period. Sales of Monster declined 3%. Sales of Reign were down 0.5%. Sales of NOS increased 4.1% and and sales of Full Throttle decreased 6.9%. Sales of Red Bull increased 1.7%. According to Nielsen, for the 4 weeks ended July 20, 2024, sales in dollars in the energy drink category, in the convenience and gas channel, including energy shots in dollars, decreased 2.2% over the same period the previous year. Sales of the company's energy brands, excluding Bang, decreased 4.8% in the 4-week period in the convenience and gas channel. Sales of Monster decreased by 5.4% over the same period versus the previous year. Reign sales decreased 3.8% and NOS was up 2.6% and Full Throttle was down 8.6%. Sales of Red Bull were up 0.7% or 0.8%. According to Nielsen, for the 4 weeks ended July 2024, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased from 35.7% to 34.7%. Excluding Bang, including Bang, the company's market share is 36.7%. Monster share decreased from 29.4% a year ago to 28.5%. Reigns share rains decreased 0.1 of a share point to 3%, NOS share increased 0.1 of a share point to 2.6%, and Full Throttle share remained at 0.7%. Bang's share was 1.9% and Red Bull share increased 1 share point to 35.9%. Market share of certain competitors were as follows: CELSIUS 7.9%, C4 3.5%, 5-hour 3.3%; Rockstar 3% and GHOST 3%. According to Nielsen, for the 4 weeks ended July 20, 2024, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line, in the convenience and gas channel decreased 11.2% over the same period the previous year. Sales of Java Monster including Java Monster 300 and Java Monster Nitro Cold Brew was 5.6% lower in the same period versus the previous year. Sales of Starbucks Energy were 17.9% lower. Java Monster share of the coffee plus energy drink category for the 4 weeks ended July 20, 2024, was 57.4%, up 3.4 points, while Starbucks Energy share was 42.2%, down 3.5 points. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended July 30, 2024, the energy drink category increased 6.8% in dollars. Sales of the company's energy drink brands increased 2.1% versus a year ago. The market share of the company's energy drink brands decreased 1.8 points to 40.2%. Monster sales decreased 1.2% and its market share decreased 2.8 points to 34.7%. NOS' sales increased 17.4% and its market share increased 0.1 point to 1.3%. Full Throttle sales increased 66.9% and its market share increased 0.2 or 2.5 of 8%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 20.3% for the month of June 2024. Monster sales increased 18.1%, Monster's market share in value decreased 0.5 point to 28.2% against the comparable period the previous year. Sales of Predator increased 21.8% and and its market share increased 0.1 of a share point to 6%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively ourselves in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for all outlets combined in Brazil, the energy drink category increased 19.1% and for the month of June 2024. Monster sales increased 29.1%, Monster's market share in value increased 3.7 points to 48.1% compared to June 2023, in Argentina, due in part to the impact of inflation-related local currency price increases. The energy drink category increased 301.3% for the month of June 2024. Monster sales increased 320.2%. Monster's market share in value increased 2.6 points to 58.1% compared to June 2023. In Chile, the energy drink category increased 0.8% for the month of June 2024. Monster sales increased 1.4%, Monster's market share in value increased 0.2 point to 41.1%. Monster Energy remains the leading energy brand in value in Argentina, Brazil and Chile. I'd like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period ending July 14, 2024, Monster's retail market share in value as compared to the same period the previous year, grew from 16.6% -- 16.1% to 16.4% in Belgium, from 30.8% to 33.5% in Great Britain and from 5.5% to 6.8% in the Netherlands. According to Nielsen, in the 13-week period ended July 14, 2024, Monster's retail market share in value as compared to the same period the previous year declined from 32.6% to 31% in France from 31% to 29.5% in Norway, and from 40.8% to 40.6% in Spain. According to Nielsen, in the 13-week period ending June 30, 2024, Monster's retail market share in value as compared to the same period the previous year grew from 16.4% to 17.3% in Germany. According to Nielsen, in the 13-week period ending June 30, 2024, Monster's retail market share in value as compared to the same period the previous year declined from 31.5% to 30.6% in Italy and from 18.2% to 17.7% in South Africa. According to Nielsen, in the 13-week period ending June 16, 2024, Monster's retail market share in value as compared to the same period the previous year, grew from 30.4% to 30.9% in the Republic of Ireland. According to Nielsen, in the 13-week period ending June 16, 2024, Monster's retail market share in value as compared to the same period the previous year declined from 22.1% to 21.4% in the Czech Republic and from 16% to 14.3% in Sweden. According to Nielsen, in the 13-week period ending May 31, 2024, Monster's retail market share in value as compared to the same period of the previous year, grew from 18.8% to 18.9% in Poland. According to Nielsen, in the 13-week period ending May 19, 2024, Monster's retail market share in value as compared to the same period the previous year declined from 28% to 27.3% in Denmark and from 37.5% to 34.7% in Greece. According to Nielsen, in the 13-week period ending May 31, 2024, Creditors retail market share in value as compared to the same period the previous year. Grew from 32.3% to 37.2% in Kenya and from 19.6% to 21.9% in Nigeria. Combining our markets in EMEA for the last 13 weeks, the energy category has grown 10.5%. Of note, for the same period, the category in Great Britain grew 1.9% in Germany, 9.9% in France, 11.4% in Ireland, 6.1% in Spain, 2.4% and in South Africa, 4.6%. According to IRI, for all outlets combined in Australia, the energy drink category increased 10.8% for the 4 weeks ending July 14, 2024. Monster's sales increased 24.9%. Monster's market share in value increased 2.2 points to 19.1% and against the comparable period the previous year. Sales of Mother increased 7.2% and its market share decreased 0.4 share points to 10.7%. According to IRI, for all outlets combined in New Zealand, the energy drink category increased 6.1% for the 4 weeks ending July 7, 2024. Monster sales decreased 3.7%. Monster's market share in value decreased 0.3 of a share point to 14.6% against the comparable period the previous year. Sales of Mother increased 12.8% and its market share increased 0.3 of a share point to 5.7%. Sales of Live+ decreased 1.9% and its market share decreased 0.4 of a share point to 5.2%. According to INTAGE, in the convenience channel in Japan, the energy drink category decreased 5.2% for the month of June 2024. Monster sales increased 4.2%, and Monster's market share in value increased 5.5 points to 60.6% against the comparable period the previous year. According to Nielsen, for all outlets combined in South Korea, the energy drink category increased 16.6% for the month of June 2024. Monster's sales increased 5.4% and Monster's market share in value decreased 5.6 points to 52.1% against the comparable period the previous year. We again put out that certain market statistics that cover single months or 4-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $746 million, 39.3% of total net sales in the 2024 second quarter compared to $715.4 million 38% of total net sales in the corresponding quarter in 2023. Foreign currency exchange rates had a negative impact on net sales in the U.S. by approximately $67.7 million in the 2024 second quarter, of which $34 million related to Argentina. In EMEA, net sales in the 2024 second quarter increased 2.8% in dollars and increased 8.7% on a currency-neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales for the 2024 second quarter was 34.7% compared to 34% in the same quarter in 2023. Net sales in EMEA decreased by approximately 3.2% in the 2024 second quarter due to supply, chain issues in Germany caused by production capacity and distribution constraints. We continued to execute our strategic initiative across EMEA in the second quarter with the launch and rollout of Monster Zero Sugar, which is now in 32 markets. We are also pleased that in 2024 second quarter, Monster gained market share in Belgium, Germany, Great Britain, the Netherlands, Poland and the Republic of Ireland. In Asia Pacific, net sales in the 2024 second quarter decreased 1.2% in dollars and increased 5.8% on a currency-neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales for the 2024 second quarter was 45.4% and versus 42.4% in the same period in 2023. Net sales in Japan in the 2024 second quarter decreased 11.8% in dollars and increased 0.4% on a currency-neutral basis. In South Korea, net sales in the 2024 second quarter decreased 16.9% in dollars and decreased 14.3% on a currency-neutral basis as compared to the same quarter in 2023, largely due to the timing of production schedules this year. Monster remains the market leader in Japan and South Korea. In China, net sales in the 2024 second quarter increased 25.6% in dollars and increased 31.2% on a currency-neutral basis as compared to the same quarter in 2023. We remain optimistic about the long-term prospects for the Monster brand in China and are excited about the recent launch of Predator, which is being rolled out to additional markets in China over this year and 2025. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 2.9% in dollars and increased 4.7% on a currency-neutral basis. In Latin America, including Mexico and the Caribbean, net sales in the 2024 second quarter increased 14.1% in dollars and increased 39% on a currency-neutral basis over the same period in 2023, 14.9% exclusive of Argentina's impact. Gross profit in this region as a percentage of net sales was 45.8% for the 2024 second quarter versus 30.9% in the 2023 second quarter. In Brazil, net sales in the 2024 second quarter increased 33.2% in dollars and increased 37.4% on a currency-neutral basis. Net sales in Mexico increased 22.6% in dollars and increased 13.7% on a currency-neutral basis in the 2024 second quarter. Net sales in Chile decreased 28.1% in dollars and decreased 14.7% on a currency-neutral basis in the 2024 second quarter due to challenging economic conditions in the country. Our market share in the quarter increased to 41.3% plus 0.2 of a share point in the month June, our share was 41.1%. Net sales in Argentina decreased 29.5% in dollars and increased 172.9% on a currency-neutral basis in the 2024 second quarter. We remain the market leader in Argentina at 57.7% share and gained 2.4 share points in the second quarter. Monster Brewing had a challenging second quarter. Net sales for the alcohol brands segment were $41.6 million in the 2024 second quarter a decrease of approximately $19.5 million or 31.9% lower than 2023 comparable quarter. We have recently appointed a new President of Monster Brewing and are continuing to consolidate production facilities to maximize efficiencies. During the quarter, we took a write-down of approximately $8.1 million relating to certain brewery closures. The Beast Unleased is now available in 50 states through a network of beer distributors after the launch in the state of July and July due to in July, we expanded the Beast Unleased into 24-ounce single-serve cans in the first half of the year. We are currently launching a second variety pack of the Beast Unleased in a 12-pack of slim 12-ounce cans in 4 flavors. Mean Green, Pink poison, Nali Grape and Killer Sunrise. Nasty Beast, our new HeartTline was launched in the 2024 first quarter and is now available in 49 states. In the United States, we are preparing for the launch of Monster Energy Ultra vis Guava in October 2024. In Canada, during the month of April, we launched NazerSugar and rainstorm in 4 flavors. Additionally, in the month of June, we launched Bang Energy in 4 flavors. In Latin America, during the second quarter of 2024, we launched Monster Zero Sugar in Argentina, Ultrapar in Colombia, Monster Juice Pipeline punching Guatemala, Ultrapar in Ecuador and reserve white pineapple in Nicaragua. In New Zealand, during the month of April, we launched Monster Energy Ultra Strawberry Dreams. And in May, we launched Monster Energy Zero Sugar. In EMEA, in the second quarter of 2024, we launched Monster juiced or lemonade juiced bad Apple, Ultra Gold and pineapple and Ultra piece, Ultra Rosa and Ultra Strawberry Dreams in a number of countries. In the EMEA in the second quarter of 2024, we also launched lines punch], Burn Graver, Burn Punch, Raiman Matic and Nalu Yuzu Rosemary Lemonade in a number of countries. We launched our new clean energy brand, Reign Storm, with 3 SKUs, Valencia Orange, Kewi Blend and Peach Nectarine in Great Britain and Sweden in the second quarter. Additional launches are planned across all brands throughout EMEA in 2024. During the second quarter of 2024, we launched Monster Ultra Violet and Papillon in Japan. And Peachy Keen and Aussie Lemonade in Korea. In China, Predator Goldstrike, which was launched in selected provinces of China at the end of April 2024, continues meeting expectations being incremental to Monster and will be launched in additional provinces by year-end. In India, predated Gold Strike in a PET format which was launched as a test in 1 region at the end of 2023 is also meeting expectations. We are planning to launch that pack format in additional regions in India later this year. We remain optimistic about the long-term prospects for the Monster brand in China and India and are excited about the expansion of Predator in these 2 countries. On June 10, 2024, the company announced the final results of its modified Dutch auction tender offer, which expired on June 5, 2024. The company accepted for purchase approximately 56.6 million shares of common stock at a purchase price of $53 per share for an aggregate purchase price of approximately $3 billion excluding fees and expenses related to the tender offer. In addition, during the 3 months ended June 30, 2024, the company repurchased approximately 2.2 million shares over common stock at an average purchase price of $49.55 per share for a total consideration of approximately $107.7 million, excluding broker commissions. Subsequent to June 30, 2024, the company repurchased approximately 3.9 million shares of its common stock at an average purchase price of $49.59 per share for total consideration of approximately $192.2 million, excluding broker commissions. As of August 6, 2024, approximately 342.4 million shares remained available for purchase -- sorry, $342 million remained available for purchase under the previously authorized repurchase program. We estimate that July 2024 sales were approximately 5.9% higher than the comparable July 2023 sales and 6.1% higher than July 2023, excluding the alcohol brand segment. We estimate that on a foreign currency adjusted basis, including the alcohol brands segment July 2024 sales were approximately 9.4% higher than the comparable July sales and 9.6% higher than July 2023, excluding the alcohol brands segment. July 2024 had 2 more selling days compared to July 2023. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates in which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. The energy category continues to grow globally. We believe that household penetration continues to increase in the energy drink category. Growth opportunities in household penetration per capita consumption along with consumers' need for energy or positive factors for the category. We continue to expand our sales in non-Nielsen measured channels. We are pleased to report that our pricing actions have not significantly impacted consumer demand. As reported earlier, we are planning a price increase in the United States on our core brands and packages effective November 1, 2024. We continue to review opportunities for price increases internationally. Our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. We are in the process of constructing a juice facility at our AFF flavor facility in Ireland, which we anticipate will be completed later this year. We're excited for the launch of Monster Energy Ultra Vice Guava in October 2024. Monster Brewing continues to provide opportunities within the alcohol brand segment. We're excited about the opportunities that the acquisition of the Bang Energy brand presents to us and believe that the brand fits well within our broader portfolio of energy drink brands. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio in a number of markets internationally. We are proceeding with plans for further launches of our affordable energy brands. I would like to now open the floor to questions about the quarter. Operator: [Operator Instructions] Our first question today comes from Dara Mohsenian from Morgan Stanley. Dara Mohsenian: The commentary on the U.S. category was helpful. Could you just put the recent slowdown you're seeing maybe in context versus other soft patches if you go back in history just in terms of drivers, magnitude, et cetera, just to give us some insight on how long you expect this to last? And also within that, maybe you can just touch on the promotional environment and how that might impact your plans to maybe cushion some of the pending U.S. price increase with promotion and how you guys think through that? Rodney Sacks: Sure. Dara, historically, we've seen declines in quarterly year-over-year volumes, really only during the financial crisis and COVID lockdowns in the U.S., and they particularly significantly impacted foot traffic. The current situation in the U.S. is actually relatively unprecedented. And we've not seen inflation rates, and we haven't seen inflation levels, I'm sorry, and interest rates for one heck of a long time. And we believe that those have contributed to the slowdown. If you look internationally and those markets traditionally have been -- have a longer history of energy drinks. We saw and have seen slowdowns in certain European countries over the periods. And in each case that we've seen them, the levels have, in fact, rebounded. So at the end of the day, when you look at the positive factors, we believe that energy drinks certainly are a need state, consumers want energy drinks and Household penetration is growing, all the things we spoke about really on this call. And what we like other consumer products companies, we see this decline primarily driven by a reduction in consumer spending and the lower foot traffic in the convenience channel. We've seen reports of foot traffic convenience channel being down by as much as 3% to 3.5%. And then a swing towards more grocery mass on -- online purchasing. So it's kind of a situation where we are a blue collar brand. And our consumers are more hard pressed than consumers in other categories. And that's why maybe we have seen a larger reduction than other competitive products in the space. But at the end of the day, some of those competitive products have had price increases, which we have not had yet and we will have later this year. Operator: Our next question comes from Andrea Teixeira from JPMorgan. Andrea Teixeira: I was hoping if you can talk about the -- basically about the channels, you discuss the mass channels and discounts being 1 and how you've been able to shift for those consumers who are looking for basically more affordable energy. And you did a reference to to production challenges internationally. Is there a way to think about it and the impact and if it's temporary, how we should be thinking about those? Rodney Sacks: The production challenges, which were in Germany have largely been resolved now. It is a situation where there was a lack of capacity in a particular plant, we set up facilities in other manufacturing entities and then the plants in Germany that the distribution points in Germany we're unable to accept product because there were -- they had challenges getting product in because we have a very large market in Germany. So it was a mix of factors. By the end of the day, we're back and running and we don't anticipate a recurrence of that issue in Germany this quarter. Hilton Schlosberg: Just to give color on the German issue. You must appreciate that in the second quarter, they had the European soccer championships, and there was a lot of extra demand a lot of unusual things happen, and that's why we ended up with this challenge. Which we think was unusual, and it's not likely to occur again in the future, and we've taken steps to address it for -- in the future and have more visibility. Operator: Our next question comes from Kaumil Gajrawala from Jefferies. Kaumil Gajrawala: Can you try to just kind of reconcile the idea of still taking a price increase with the slowdown in the category. The commentary on who your core consumer is, they're being a little bit more careful doesn't seem to align with the idea to take a price increase, later? Rodney Sacks: Yes. Kaumil, if you look at our pricing, where we are relative to other other beverages that we would regard as kind of comparative. Those are the beverages, they've dramatically expanded their price. We've passed the price index to Monster products. And -- we still see it as an opportunity. The extent is not that significant. We still will retain a very competitive price for consumers. . Both within the energy category and the ready-to-drink beverages as a whole. And we've discussed it with most of our major distributors and customers. And we've absorbed significant increases. As you know, we had one increase in the last 2 years. And our competitors in the ready-to-drink beverage space have had multiple. So we still see it as an opportunity. And we think it is something that we should pursue and move forward with. Operator: Our next question comes from Peter Grom from UBS. Peter Grom: Thanks, operator. Good afternoon, everyone. So I was hoping to get some just some thoughts on the quarter-to-date trends, just when backing out the benefits from selling days, it doesn't imply a ton of growth on an underlying basis, if at all. So can you maybe just talk about category trends in July maybe unpack it from a U.S. versus international perspective? And just going back to Dara's question, just any thoughts in terms of how you see growth kind of progressing from here through the balance of the quarter? Rodney Sacks: We look at Nielsen like the rest of the group. And you can really see Nielsen if -- you look at U.S. convenience and you look at all measured channels, that the situation is actually getting worse in July, and it's not getting better. So we've always spoken about our nonmeasured channels and our nonmeasured channels have continued to be a significant part of our activities and continue to grow. But looking at the Nielsen numbers, and I'm sure you've seen that, Peter, the July numbers are -- so it's not a dramatic, but it is a worsening trend. Operator: Our next question comes from Bonnie Herzog from Goldman Sachs. Bonnie Herzog: I thought... Rodney Sacks: Bonnie, we haven't thought to come on this call, we've been waiting for you. Bonnie Herzog: Well, you didn't pick me early enough. I've been here waiting. So I did want to... Rodney Sacks: We don't see the picking unfortunately. Bonnie Herzog: Yes. Okay. Well, I did want to circle back, of course, slowdown that you guys did report in the quarter versus your expectations. I guess I am still trying to reconcile a few things. Could you maybe help us understand where bottler inventory levels are? I mean, is there any timing impact by chance, especially internationally that might have impacted Q2? And then second, maybe help us understand your innovation pipeline. I know you talked about a lot, but any shipment timing impact that you saw with the rollout of innovation, whether it was in Q1 or in Q2? And then how do we think about the second half? Do you possibly have more innovation rolling out in the back half versus what you did in the first half? Rodney Sacks: Well, let me talk about -- answer your first question, Rodney will talk about innovation. We haven't heard of any bottle inventories that are challenged or have changed significantly this card. We are in summer -- and we haven't heard anything. I know and I read, obviously, one of the competitors mentioned that they had bought the inventory issues -- but we have not seen that. The only thing we spoke about is this German issue for 1 million cases, which has been rectified. Hilton Schlosberg: But I think we always every quarter, we have choppy issues with bottlers because -- as we said earlier in the quarter, it depends on when they produce and sometimes they may be producing just before or at the end of the period. That does have some effect. But again, we've not really looked and gone into it because it's really -- it's just part of the way our business is done, and we just got to live with it. And so we haven't called it out specifically, but these things do continue to occur. Rodney Sacks: If we hear something significant. Obviously, we call it out, but we haven't [indiscernible]. Hilton Schlosberg: Now with regard to innovation, innovation has been fine. We've had 2 good products -- the fantasy Ruby Red has done very well, and we've got out a little later with the Rio funds. They've both done very well. If I look at the sales point of those 2 items are pretty strong they're ahead of sales per point of competitive new product launches like Red Bull, their sugar-free this year. In fact, the sales per point of those 2 new items that we launched are actually ahead of South per point of the very top Celsius sort of SKU. So I'll just give you some sort of perspective. One of the perhaps challenges this year was perhaps a little lower than others. If you look at our the distribution levels we achieved on the innovation, they're perhaps a little lower. They've been in the 60s -- but 60s and perhaps we think that in a perfect world, that should have been closer to 75% or 80%. So that's something we are addressing with our bodily partners and with the industry. And obviously, I think we could probably improve on that. But that is probably one of the issues that perhaps didn't deliver as much in dollars on the innovation as One of the reasons that the innovation was maybe a little lower. But ultimately, the innovation has done -- is still doing pretty well when I look at even the latest weekly figures. Also, we do have this planned innovation. We have really a large company focus on the launch of Ultra Vice Guava. We think it's a really exciting, it's a really -- it's a great package. It's a great flavor. But we are, in fact, galvanizing our own team and the partners -- and we're going to go out and have a -- we believe, a real good launch of this product towards the end of this year, in the end of the third quarter, beginning of the fourth quarter. So we see that as being really positive -- and I think that give us something to execute against. We also got some good innovation coming in next year and -- but that will start shipping at the end of this year, part of it and some of it at the end of January. And we've got a good plan going through for spring of 2025. So we remain encouraged by our innovation. In fact, one of the other innovation items we launched was Zero Sugar in EMEA, which has done really nicely. We also launched Juice bad apple which we hadn't launched in the U.S., and that has been rolled out, and that is also getting some really good reception. So that is something that we'll be looking at to maybe expanding in other areas, but we went -- we tested it first in EMEA. So we do have some pipeline coming or newer products. So we are positive going forward that we'll be able to address consumer trends and look at the industry will be positive going forward. Rodney Sacks: And one other thing I just wanted to mention, Bonnie, was that if you look at 2023, remember, we launched Zero Sugar, which was the analog to Monster Green. And that was a very, very significant launch. So when you compare '24 to '23, Zero Sugar was really a major push as indeed with Strawberry Dreams, great flavors. So was really incredible with regard to launches. 2024 was great, but obviously not at the same level as '23. Hilton Schlosberg: We'll also just as a matter of interest, we've got some great innovation. We're looking to launch for Bang because that's been a new brand to our portfolio. We have our own sort of innovation launch for early next year. And we have another launch in conjunction with all means possible. And their social media response and presence on their channels and for the brand has been, we are seeing some really positive signs. So we are sort of quite positive about also being able to take Bang into start to sort of start to get that brand more focused with new innovation now, which we haven't had until now. We'll be consolidating and just getting relistings. Operator: And our next question comes from Filippo Falorni from Citi. Filippo Falorni: I wanted to ask about gross margins. You mentioned in the release that you were 50 basis points below the first quarter because of higher allowances that you think are nonrecurring and some production efficiencies. Should we think those go away starting in Q3? And then maybe you can talk about the commodity environment. It seems aluminum is still favorable year-over-year -- is it going to be still favorable in the balance of the year? Just any color on the commodity environment as well? Rodney Sacks: Let me talk a little bit about what you're referring to -- and yes, indeed, we do believe that these -- the high allowances and the production inefficiencies will take care of themselves. I'm not sure where the the production inefficiencies will take care of itself in the third quarter, but certainly, it will over time. The production inefficiencies relate to the 2 plants that we have up and running. We opened Norwalk for production in April, and we're gearing up production in NOC, which is one of the reasons for the production inefficiencies because we're gearing up that plant to full production. And then on the other hand, we have our facility in Phoenix that we acquired as part of the bank transaction, which is at present, only producing bank products. But we're gearing it up to produce Monster both the Ultra versions of Monster and Reign, which are the nonsugar varieties and then ultimately, the sugar varieties because they don't have -- they don't have sugar tanks. And we've had issues with water that we've been dealing with to ensure that we deliver the best Monster flavors possible. So that's where the production inefficiencies are coming from, and they will resolve themselves over time. The alliances absolutely will resolve themselves, we believe, in the -- this next quarter, they should be gone. So that's where we are on that. Now in the -- on the commodities environment, we hedge aluminum. So how we hedge aluminum is we use the ladder. So we purchased aluminum according to a prescribed formula and we have certain amounts at our discretionary reevaluate aluminum on a weekly basis. So -- and we take advantage, of course, of pricing when pricing falls but there are instances where we may have purchased aluminum at higher prices to ensure that our latter strategy is properly executed because there was a time in aluminum, as you know, was up -- and everyone is going to purchase aluminum and now it's back down -- so it's a -- they're plus and minuses. But I do believe that we're in good territory with aluminum and aluminum, we should be able to see reductions over time. Operator: And ladies and gentlemen, at this time, I'd like to turn the floor back over to Rodney Sacks for closing remarks. Rodney Sacks: Thanks. On behalf of the company, I'd like to thank everyone for their continued interest. We continue to believe in the company and our growth strategy and remain committed to continue to innovate, develop and differentiate our brands and to expand the company both at home and abroad and in particular, capitalizing on our relationship with the Coca-Cola bottling system. We believe that we're well positioned in the beverage industry and continue to be optimistic about the future of the company. We hope that you remain safe and healthy. Thank you very much for your attendance. Operator: And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending. You may now disconnect your lines.

Operator: Good day, and welcome to the Monster Beverage Company First Quarter 2024 Conference Call. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to CEO, Rodney Sacks and Hilton Schlosberg. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Thomas Kelly: 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 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 February 29, 2024, 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. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company achieved record first quarter net sales of $1.9 billion in the 2024 first quarter, 11.8% higher than net sales of $1.7 billion in the 2023 comparable period and 15.6% higher on a foreign currency adjusted basis, 12.6% exclusive of Argentina's impact. Gross profit as a percentage of net sales for the 2024 first quarter was 54.1%, compared with 52.8% in the comparative 2023 first quarter. The increase in gross profit as a percentage of net sales for the 2024 first quarter as compared to the 2023 first quarter was primarily the result of decreased freight-in costs, pricing actions in certain markets and lower input costs, partially offset by geographical sales mix. Operating expenses for the 2024 first quarter were $485.1 million compared with $412.8 million in the 2023 first quarter. As a percentage of net sales, operating expenses for the 2024 first quarter were 25.5%, compared with 24.3% in the 2023 first quarter. The increase in operating expenses was primarily the result of increased storage and warehouse, increased marketing expenses, increased sponsorship and endorsement and social media expenses as well as increased payroll expenses. Distribution expenses for the 2024 first quarter were $94.4 million, or 5% of net sales compared to $76.3 million or 4.5% of net sales in the 2023 first quarter. Operating income for the 2024 first quarter increased 11.7% to $542 million from $485.1 million in the 2023 comparative quarter. The effective tax rate for the 2024 first quarter was 23.5%, compared with 20.1% in the 2023 first quarter. The increase in the effective tax rate was primarily attributable to a decrease in the stock-based compensation deduction in the 2024 first quarter as compared to the 2023 first quarter. Net income increased 11.2% to $442 million as compared to $397.4 million in the 2023 comparable quarter. Diluted earnings per share for the 2024 first quarter increased 12% to $0.42 from $0.38 in the first quarter of 2023. The company implemented price increases in the first quarter of 2024 in certain international markets, including highly inflationary markets. We are continuing to monitor opportunities for further pricing actions in both the United States and internationally. The company continues to have market share leadership in the energy drink category for all outlets combined in the United States in both the 13-week and 4-week periods ended April 20, 2024. According to the Nielsen report for the 13 weeks through April 20, 2024, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 3.8% versus the same period a year ago. Sales of the company's energy brands, excluding Bang, were up 0.1% in the 13-week period. Sales of Monster declined 1.4%, sales of Reign were up 16.1%, Sales of NOS increased 4.9% and sales of Full Throttle increased 1.7%. Sales of Red Bull increased 3.6%. According to Nielsen, for the 4 weeks ended April 20, 2024, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars, increased 1% over the same period the previous year. Sales of the company's energy brands, excluding Bang, decreased 2.1% in the 4-week period in the convenience and gas channel. Sales of Monster decreased by 3.3% over the same period versus the previous year. Reign sales increased 5.3%, NOS was up 4.5% and Full Throttle was down 0.6%. Sales of Red Bull were up 2.1%. According to Nielsen, for the 4 weeks ended April 20, 2024, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased from 36.8% to 35.7% and excluding Bang. Including Bang, the company's market share is 37.3%. Monster share decreased from 30.6% a year ago to 29.3%. Reign's share increased 0.1 of a share point to 3.1%. NOS' share increased 0.1 of a share point to 2.6% and Full Throttle share remained at 0.7%. Bang share was 1.6%. Red Bull share increased 0.4 of a share point to 34.6%. Market share of certain competitors were as follows: CELSIUS 8.5%, C4 3.7%, 5-Hour 3.3%; Rockstar 3% and GHOST 3%. According to Nielsen, for the 4 weeks ended April 20, 2024, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line, in the convenience and gas channel decreased 10.7% over the same period the previous year. Sales of Java Monster, including Java Monster 300 and Java Monster Nitro Cold Brew were 3.6% lower in the same period versus the previous year. Sales of Starbucks Energy were 19.5% lower. Java Monster share of the coffee plus energy drink category for the 4 weeks ended April 20, 2024, was 59.5%, up 4.4 points, while Starbucks Energy share was down 40.1% -- down to 40.1%, down 4.4 points. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended March 23, 2024, the energy drink category increased 10.2% in dollars. Sales of the company's energy drink brands increased 2.9% versus a year ago. The market share of the company's energy drink brands decreased 2.8 points to 40.3%. Monster sales increased 4.2% and its market share decreased 2.1 points to 36.5%. NOS' sales decreased 6.9% and its market share decreased 0.2 points to 1.1%. Full Throttle sales increased 22.2% and its market share remained at 0.5%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 23.1% for the month of March 2024. Monster sales increased 20.2%. Monster's market share in value decreased 0.7 of a point to 29.3% against the comparable period the previous year. Sales of Predator increased 28.6% and its market share increased 0.2 share points to 5.9%. The Nielsen statistics for Mexico cover a single month, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for all outlets combined, in Brazil, the energy drink category increased 15.7% for the month of March 2024. Monster sales increased 26.7%. Monster's market share in value increased 4.2 points to 48.1% compared to March 2023. In Argentina, due in part to the impact of inflation-related local currency price increases, the energy drink category increased 265.9% for the month of March 2024. Monster sales increased 300.2%. The Monster's market share in value increased 5 points to 58.5% compared to March 2023. In Chile, the energy drink category decreased 8.4% for the month of March 2024. Monster sales decreased 7.8%. Monster's market share in value increased 0.3 points to 42.9%. Monster Energy remains the leading energy brand in value in Argentina, Brazil and Chile. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period until the end of March 2024, Monster's retail market share in value as compared to the same period the previous year grew from 15.5% to 16.2% in Belgium; from 32.8% to 34.2% in France; from 30.8% to 33.1% in Great Britain; from 4.7% to 6.6% in the Netherlands; from 28.3% to 30.3% in the Republic of Ireland; and from 39.9% to 41.3% in Spain. According to Nielsen, in the 13-week period until the end of March 2024, Monster's retail market share in value as compared to the same period the previous year declined from 34.6% to 32.8% in Norway; from 19.5% to 19% in South Africa; and from 17.9% to 14.7% in Sweden. According to Nielsen, in the 13-week period until the end of February 2024, Monster's retail market share in value as compared to the same period the previous year, grew from 20.4% to 22.6% in the Czech Republic; from 29.3% to 29.9% in Italy; and from 15.9% to 17.2% in Germany. According to Nielsen, in the 13-week period until the end of February 2024, Monster's retail market share in value as compared to the same period in the previous year, remained flat at 18.9% in Poland. Monster's retail market share in value as compared to the same period the previous year declined from 27.6% to 26.7% in Denmark, and from 36.6% to 34.9% in Greece. According to Nielsen, in the 13-week period until the end of February 2024, Predator's retail market share in value as compared to the same period the previous year, grew from 31.9% to 34.3% in Kenya and from 19.5% to 20.8% in Nigeria. According to IRI, for all outlets combined in Australia, the energy drink category increased 9.5% for the 4 weeks ending April 7, 2024. Monster sales increased 27.5%. Monster's market share in value increased 2.9 points to 20.3% against the comparable period the previous year. Sales of Mother increased 8% and its market share decreased 0.1 of a share point to 11.1%. According to IRI for all outlets combined in New Zealand, the energy drink category increased 5.2% for the 4 weeks ending April 7, 2024. Monster sales decreased 0.5%. Monster's market share in value decreased 0.8 of a share point to 14.4% against the comparable period the previous year. Sales of Mother increased 36.2% and its market share increased 1.5 share points to 6.6%. Sales of Live+ decreased 8.8% and its market share decreased 0.8 of a share point to 5.3%. According to INTAGE, in the convenience channel in Japan, the energy drink category decreased 7.5% for the month of March 2024. Monster sales increased 4.4%. Monster's market share in value increased 6.8 points to 59.5% against the comparable period the previous year. According to Nielsen, all outlets combined in South Korea, the energy drink category increased 11.5% for the month of March 2024. Monster sales increased 1.1%. Monster's market share in value decreased 5.3 points to 51.4% against the comparable period the previous year. We again point out that certain market statistics that cover single months or 4-week periods may often be materially influenced, positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $744.1 million, 39.2% of total net sales in the 2024 first quarter compared to $622.9 million or 36.7% of total net sales in the corresponding quarter in 2023. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $64.4 million in the 2024 first quarter, of which $50.4 million related to Argentina. In EMEA, net sales for the 2024 first quarter increased 28.2% in dollars and increased 32% on a currency-neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales for the 2024 first quarter was 34% compared to 30.7% in the same quarter in 2023. We executed a strategic initiative across EMEA in the first quarter with the launch of Monster Energy Sugar in 27 markets. We are also pleased that in the 2024 first quarter, Monster gained market share in Belgium, Czech Republic France, Germany, Great Britain, Italy, the Netherlands, Norway, the Republic of Ireland and Spain -- sorry, Monster Zero Sugar. In Asia Pacific, net sales in the 2024 first quarter were flat in dollars and increased 6% on a currency-neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales for the 2024 first quarter was 42.6% versus 44.4% in the same period in 2023. Net sales in Japan in the 2024 first quarter decreased 2.8% in dollars and increased 7.4% on a currency-neutral basis. In South Korea, net sales in the 2024 first quarter increased 1.2% in dollars and increased 4.3% on a currency-neutral basis as compared to the same quarter in 2023. Monster remains the market leader in Japan and South Korea. In China, net sales in the 2024 first quarter increased 16.4% in dollars and increased 21.2% on a currency-neutral basis as compared to the same quarter in 2023. We remain optimistic about the long-term prospects for the Monster brand in China and are excited about the launch of Predator this year. In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales decreased 7.1% in dollars and decreased 3.6% on a currency-neutral basis. In Latin America, including Mexico and the Caribbean, net sales in the 2024 first quarter increased 14.7% in dollars and increased 46.2% on a currency-neutral basis over the same period in 2023, 10.9% exclusive of Argentina's impact. Gross profit in this region as a percentage of net sales was 42.8% for the 2024 first quarter versus 33% in the 2023 first quarter. In Brazil, net sales in the 2024 first quarter increased 32.2% in dollars and increased 25.6% on a currency-neutral basis. Net sales in Mexico increased 32.9% in dollars and increased 19.6% on a currency-neutral basis in the 2024 first quarter. Net sales in Chile decreased 16.3% in dollars and decreased 8.9% on a currency-neutral basis in the 2024 first quarter. And net sales in Argentina decreased 14.3% in dollars and increased 251.3% on a currency-neutral basis in the 2024 first quarter. We continued with the expanded distribution of the Beast Unleased during the first quarter of 2024, which is now available in 49 states through a network of beer distributors and will be in all 50 states by the end of summer. We have commenced with the rollout of the Beast Unleashed in 24-ounce single-serve cans and are seeing early success while maintaining the base of 16-ounce single-serve cans that were launched last year. We are pleased with the results of the Beast Unleashed and are continuing to expand points of distribution of this brand. Nasty Beast, our new Hard Tea line was launched in 12-ounce variety packs in January 2024, and in 24-ounce single-serve cans in February 2024 and is now available in 49 states. Early response to the brand has been positive, and we are continuing to focus heavily on expansion of distribution. In the United States in January, we launched Reign Storm, Guava Strawberry and Citrus Zest. In February, we launched Monster Rehab Green Tea, Reignbow Sherbet, Sour Gummy Worm, Monster Juice Rio Punch, Monster Reserve Peaches N’ Crème, Monster Java Irish Crème and Monster Energy Ultra Fantasy Ruby Red, and in the latter product, both in a 16-ounce and 12-ounce package. In March, we launched Reign Storm Strawberry Apricot and Mango. In addition to these launches, we continue to innovate in our multipack variety pack offerings. In Canada, during the first quarter, we launched Monster Energy Ultra Strawberry Dreams, Reign Total Body Fuel Cherry Limeade, Monster Reserve Orange Dreamsicle and Monster Rehab Wild Berry Tea. In Mexico, during the month of January, we launched Monster Energy Zero Sugar and Predator Tropical. In Brazil and Puerto Rico during the month of February, we launched our Monster Energy Zero Sugar. In Oceana, during the first quarter of 2024, we launched 2 new innovations within Australia. In February, we launched Monster Energy Ultra Strawberry Dreams and Monster Energy Zero Sugar. In EMEA, in the first quarter of 2024, we launched Monster Juiced Monarch, Nitro Cosmic Peach, Reserve Orange Dreamsicle and Ultra Peachy Keen in a number of countries. Additional launches are planned throughout EMEA in 2024. During the first quarter of 2024, we launched Monster Ultra Violet in Japan, Monster Ultra Peachy Keen in Korea, Taiwan and Hong Kong, and Monster Pipeline Punch in China. During the quarter, we also introduced Predator Gold Strike in the Philippines and Azerbaijan. Last month, we launched a noncarbonated Predator Gold Strike in a 500 ml PET bottle in selected provinces in China. Initial acceptance from retailers and consumers has been positive. During the 2024 first quarter, the company purchased approximately 1.8 million shares of its common stock at an average purchase price of $54.96 per share, for a total amount of $97.2 million, excluding broker commissions. As of May 2, 2024, approximately $642.4 million remained available for repurchase under the previously authorized repurchase programs. The company intends to commence a modified Dutch Auction tender offer for up to $3 billion in value of shares of its common stock, subject to market conditions at a specified price range that is yet to be determined. The company believes that the tender offer represents an efficient mechanism to permit shareholders the opportunity to obtain liquidity without the potential disruption that can result from market sales. The Company expects to fund the tender offer with approximately $2 billion of cash on hand and approximately $1 billion in combined borrowings, consisting of a new revolving credit facility and a new delayed draw term loan facility, each expected to be consummated prior to the completion of the tender offer. The tender offer will be made outside of the Company's previously authorized repurchase programs and will allow the Company to retain the ability to purchase additional shares through the previously authorized repurchase programs in the future. The Company's co-CEOs, namely Hilton and myself, have indicated that we intend to participate in the offer for investment diversification and estate planning purposes. My participation in particular, may provide me some flexibility to consider my own potential options, which may also help the Company continue succession planning for its next phase of leadership. In this regard, after consultation with the Company's Board, I am considering reducing my day-to-day management responsibilities starting in 2025, while continuing to manage certain areas of the Company's business for which I have always been responsible. At that time, I intend to remain Chairman of the company's Board and Mr. Schlosberg would segue from Co-CEO to CEO. We estimate that on a foreign currency adjusted basis, including the alcohol brand segment, April 2024 sales were approximately 12.9% higher than the comparable April 2023 sales and 14.9% higher than April 2023, excluding the alcohol brands segment. Excluding Argentina's impact, we estimate that on a foreign currency adjusted basis, including the alcohol brand segment, April 2024 sales were approximately 11.5% higher than the comparable April sales and 13.5% higher than April 2023, excluding the alcohol brand segment. We estimate April 2024 sales, including the alcohol brands segment to be approximately 10% higher than in April 2023 and 11.9% higher than in April 2023, excluding the alcohol brand segment. April 2024, we had 2 more selling days compared to April 2023. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintained inventory levels according to their own internal requirements which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. The energy category continues to grow globally. We are pleased to report that our pricing actions have not significantly impacted consumer demand. Our AFF flavor facility in Ireland is now providing a larger number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. We are in the process of constructing a juice facility at our AFF flavor facility in Ireland. We have a robust innovation plan for 2024. Beast Unleashed is performing to expectations. We're excited for Nasty Beast Hard Tea as well as the additional alcohol opportunities that Monster Brewing Company presents. Initial acceptance from retailers and consumers has been positive. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio in a number of markets internationally, including the launch last month of Predator in a noncarbonated formula in 500 ml PET bottles in selected provinces in China. We are proceeding with plans for further launches of our affordable energy brands. We are excited about the opportunities that the acquisition of the Bang Energy brand presents to us and believe that the brand will fit well within our broader portfolio of energy drink brands. The company achieved record first quarter net sales of $1.9 billion in the 2024 first quarter, 11.8% higher than net sales of $1.7 billion in the 2023 comparable period and 15.6% higher on a foreign currency adjusted basis, or 12.6% exclusive of our Argentina's impact. I would now like to open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] Our first question comes from Filippo Falorni of Citi. Filippo Falorni: I just wanted to ask on the April number you just gave, I know 1 month of data is not indicative of your long-term results. But just maybe clarify what's in there. Is the 2 extra day included in the number because that alone can get you to about 10 points of growth? And maybe any timing-related impacts that impacted the number compared to like what you just reported in Q4? That would be helpful. Unknown Executive: So the 2 extra days in April were obviously included in the numbers that we reported for April sales. The second part of your question, I actually didn't really understand. So maybe you can repeat it. Filippo Falorni: Sure. I was just curious, like, is there any impact in terms of shipment timing to the bottlers, considering the trend that we've seen in Q4, it seems a material deceleration. So wondering whether is there any timing impact in that number, in the April number? Unknown Executive: Yes. So we've always spoken in our business about the fact that we sell to the bottlers. And in some cases, the bottlers particularly internationally in manufactured products for us, which we purchase from the bottlers and then sell to them as part of the distribution arrangements. And oftentimes, they determine when they want to produce. So we expect them to produce on such and such a day and such and such a month, they may produce in a subsequent month or they may produce earlier. So when we talk about ourselves, remember, there are sales to the bottlers, they are not sales to -- we do some business at direct to customers, but most of our sales are done to the bottlers. Operator: Our next question comes from Andrea Teixeira of JPMorgan. Andrea Teixeira: I was hoping if you can talk a bit about how we should be thinking of the consumer, in particular in the U.S.? We have been hearing a lot of your peers talk about a softening and how we should be thinking of in the context of pricing that you potentially alluded, some of your competitors have taken pricing. You decided to stay put at this point. Anything you can add and how it relates to aluminum going up on the spot price? Unknown Executive: This is a repeated question from you, and thanks for raising it again. As you know, we have a very strong brand. The brand is an affordable luxury. And it's strategic for us to orchestrate when and if we'll take price. So I think we've done a lot of evaluation on what makes sense and what makes sense to the brand, as we said we would. And in principle, we have really worked hard at really coming to a decision that a pricing opportunity is out there. And we -- I'm not saying how much it's going to be. It's going to be later this year, but we will be announcing to bottlers and retailers sometime in the next few months because there's -- as you know, there's a 30- to 60-day -- mainly 60 days for implementation of a price increase, but we expect it to happen in the fourth quarter. Operator: The next question comes from Peter Grom of UBS. Peter Grom: Rodney and Hilton, I know no changes for some time, but congrats on kind of the new roles to come. I guess I just wanted to ask about the Dutch Auction announced today. Just kind of -- just would love some perspective on the decision process? Why now? Why using debt? Is this a change in terms of how you're thinking about the balance sheet in longer term? Or is this just kind of a short-term dynamic? And lastly, I'm not sure if I missed this, but did you provide any color on timing as it relates to this? Rodney Sacks: I think that it's a question of timing. I think that given the recent softness in the market, we believe that it is an opportunistic time to execute an at-scale transaction of this nature. We believe that this structure gives the company the opportunity to repurchase a greater number of shares and do so more quickly than we could under the programs, which we've implemented, as you know, over the -- quarter by quarter, we've continually strategically bought stock back. We think that is a good use of our cash. Obviously, we look at acquisitions from time to time, but we have a lot of excess cash. . And if you remember, we did a similar modified Dutch Auction in 2016 that we thought was very successful. It enabled the company to buy back shares, and we moved on. So we think the timing is right. We think that we'll probably implement it shortly in the next week or so. We'll come out with the documentation and the formal announcement. So it will be in this quarter. We also want to make the point that the tender offer is going to be in addition to our existing plans, which will remain in place. And that will also continue to give us opportunity to, again, to continue to buy additional shares as and when opportunistically, we think we should. Operator: The next question comes from Chris Carey of Wells Fargo Securities. Christopher Carey: Just a follow-up on the pricing announcement in Q4. Just is that on the entire U.S. portfolio? Is that the plan? And then just the question would be, I think this is the best international gross margin in several years. And so is there anything structurally occurring in your international margin structure? Or is this just maybe just easing commodities, easing import, cost easing. So basic question, is this just more cyclical in commodities? Or is there something else going on within your international gross margins? Unknown Executive: So referring to your first question. And you asked a question about gross margins and we -- and if you look at this quarter, we had a pickup, obviously, in international margins which we've been working on for some time, particularly in EMEA. And we also had a pickup in U.S. margins. So we've been working on improving margins across the board. You'll remember that I spoke in the first -- in the fourth quarter, when we had our final year results, and I said that our gross margin then had a few nonrecurring items in basically true-ups and rebate programs that were recognized in that fourth quarter. And I said that on an ongoing basis, on a stand-alone basis, we expected margins to be at the about the 53.5% level. Well, we did better than that. And it's something we've been working on and we'll continue to work on in trying to improve gross margins. Operator: Our next question comes from Bonnie Herzog of Goldman Sachs. Bonnie Herzog: Congratulations to you both, I guess, pending Rodney's decision. I had a question on your U.S. sales growth in the quarter, which was, I guess, a decent step down. It sounds like your business is maybe slowing month-to-month during the quarter and then a little bit in April. So could you touch on what's driving the slowdown and really for the entire category. I guess I'm also curious about this in light of your robust innovation pipeline and I think shelf-space gains. And then you mentioned that you continue to grow your sales in non-Nielsen measured channels. So first, could you just maybe clarify how your sales are performing on your end in the measured channels. And then could you give us a sense of what percentage of your business is now in nonmeasured channels, I guess, in the U.S.? Unknown Executive: So Bonnie, we don't report what percentage of our sales is done in the nonmeasured channels. So it's hard for me to give an answer to that since we don't report it, but it's something we can consider doing in the future. But our nonmeasured channels remain strong. And as you know, we have a bunch of really important customers in that category, including FSOP, Foodservice On-Premise. We have one of the big club store chains is in that nonmeasured channel. We have Home Depot, Lowe's, Amazon. So we do have a bunch of customers that operate in those nonmeasured channels. And you can see the discrepancy between the Nielsen numbers and what we report as a company because, a, the Nielsen numbers are sales to consumers, we report on sales to bottlers and our direct customers, and we also include sales to our nonmeasured channels. And then I just actually wanted to get back to a previous question where it was asked whether that price increase that we referred to would be across the whole portfolio. And when we look at the portfolio in the U.S. We have a number of different product lines. But the reference to the price increase will be on the main Monster Energy line, and possibly some of the others, but that also has not been clarified as of yet. Operator: Our next question comes from Kaumil Gajrawala of Jefferies. Kaumil Gajrawala: Can I try maybe following up on Bonnie's question a little bit more, at least from the data and stuff that we're seeing, it sounds like there is maybe more of a slowdown than perhaps what you're seeing or how you're feeling about the category itself. And just if you could dig into, is that accurate? And if so, what do you think might be happening? Rodney Sacks: First talk a little bit -- there clearly has been a slight slowdown. I mean I think that you guys have followed a lot of the consumer product companies both beverage and non-beverage. And I think that there is -- including a lot of the convenience chains we report as well. And I think there has been a report generally across the board, there is some slowdown. I think you've got to take into account that last year, there was a lot of acceleration. There were increased sales, so you're looking at it on a 2-year basis as well. But there is some softness. We think that inflation and higher gas prices are having an effect on the number of consumers that are going into the stores and traveling. And so I think that is something I think we're sort of industry-wide are experiencing. We think that things will pick up. We think that summer is coming, but that has been something you've noticed and you guys see that. You read the Nielsen's as we do, but we also look to other channels to look at increased sales. And through the other channel business, we have continued to have healthy sales. And obviously, we are introducing a lot of innovation that's getting listings now. So we are looking positive to how that will implement our sales going forward. Operator: The next question comes from Michael Lavery of Piper Sandler. Michael Lavery: Can you just give us an update on Bang and just some of your thinking on how it's progressing and specifically maybe some of the marketing activation or distribution momentum and what we might expect for plans for the rest of the year? Unknown Executive: So if you look at Bang and look at the latest 4 weeks, you'll see that sales are starting to accelerate. And mainly because we've been able to get listings as we move through to this season of listings in the chains. As you know, the brand was discontinued for a number of reasons last year. And it's been a real impetus to get the brand up and running. We believe it has, and we believe it's moving positively. The marketing for the brand is -- has really been a low ebb and it's gaining momentum as we move into the summer. We're in the process of accelerating, and I'm going to be careful what I say, but a large influencer platform to help move and accelerate the brand. So the marketing is underway. It's just taking a little bit of time to get it up and moving. As I said earlier -- or I said in previous calls, it's positioned as a lifestyle brand. And we believe that too -- we have to invest in the market, we accept that and to achieve the positioning that we're looking for. Operator: The next question comes from Peter Galbo from Bank of America. Peter Galbo: Maybe I just actually wanted to ask not on the gross margin line, but on some of the operating expense lines. I mean there's been quite a sizable build, I think, in some of those numbers and certainly ahead of, I think, what the Street had. I'm just curious, is there any timing shift there? Or is there any build in terms of the, I don't know, distribution expense ahead of either shelf resets or Bang rolling out more significantly? Just kind of want to understand how you're thinking about that going forward. Unknown Executive: Well, on the one hand, we took a conscious decision to build up inventories. So in doing so, we really had this objective of satisfying demand, which we really did not do very well at in previous years. So we have significant inventories now, and we -- our in-stock rates are climbing in the 95-plus percent levels. So we're able to service much better, but obviously, there's a cost to it. And freight, as you know, has gone up. And -- so that's one factor. Warehousing has gone up. So that's one factor in the -- in our operating expenses. There's nothing that's really that's tied to any particular period. These are all expenses that were incurred within the quarter and they reported as being in the quarter. Sponsorships are up, payroll is up. So there's a bunch of -- and you'll see it in -- more effectively in the Q, the number of cost items that are up. And as before, we do maintain a huge objective to get costs down. So these increases do not get unnoticed. But unfortunately, they're part of doing business in the world in which we're living, and we have competitors. And we have to negotiate for the best marketing dollars that we can. Rodney Sacks: The only thing I would add is that when you look at the costs, and we've had increases in sponsorship and marketing and social media, those probably are the biggest cost increases. But we are diverting or focusing a little more on the social media platforms because of the full array of our brands that are more aligned to social media consumers. Those are going to take effect and we have these programs being put in place, and we're obviously expensing those costs as we incur. But I think some of the benefits will start -- we're hoping we'll start seeing them in the second and third quarter as we go into summer, and those programs become more, more active. Operator: Our next question comes from Mark Astrachan of Stifel. Mark Astrachan: I wanted to ask who's going to be reading all of the country market share numbers, Rodney, when you transition to the full Chairman role, just kidding. Unknown Executive: Need Rodney to do that. Mark Astrachan: Seriously, I wanted to ask about international gross margins. Just curious how you think about the ability to potentially improve those in negotiating specifically better economics with the Coke system is Monster's importance to the system and to their revenue and profitability increases. And I guess maybe thinking about it broadly, right, a lot of these agreements were struck 9 years ago. So 10-year anniversary next year. I know some are up for renewal then. What about on a go-forward basis? And sort of how do you think about those discussions with the system? Unknown Executive: Yes, Mark, thanks for that question. I want to put you in that position. It's dealing with the bottlers and you've got a lot of experience, I know in talking to them, but that's really a tough egg to crack. So we have to do it in different ways. We've got to look at commodities. We have to look at it in terms of pricing. And we've got to look at it in a very judicious manner with the bottling community. We have a great business going and we've got to be very careful not to jeopardize the motivation behind the brands. Operator: The next question comes from Peter Grom of UBS. Peter Grom: I guess just on the price increase, just the question I've gotten a few times. Is there anything you can share in terms of the magnitude of the U.S. fourth quarter price increase? Unknown Executive: Peter, it's really difficult because we've come to an assessment, and before we go out to our bottlers and our retailers, it would be -- it would not be appropriate for me to talk about that at this stage. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Sacks for any closing remarks. Rodney Sacks: Thanks. 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 continue to innovate, to develop and differentiate our brands and to expand the company both at home and abroad, and in particular, capitalizing on our relationship with the Coca-Cola Bottling System. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of the company. We hope that you remain safe and healthy. Thank you very much for your attendance. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good afternoon, and welcome to the Monster Beverage Company Fourth Quarter 2023 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rodney Sacks and Hilton Schlosberg, Co-CEOs. Please go ahead. Rodney Sacks: Thank you very much. Good afternoon, ladies and gentlemen. Thanks for attending this call. I am Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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, 2023 and quarterly reports on Form 10-Q, 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 obligations to update any forward-looking statements whether as a result of new information, future events, or otherwise. Before I turn the call over to Rodney Sacks, I would like to mention a clerical error that we had with the filing of our most recent press release that was filed just within the last half hour. And under the income statement session, under the 3 months ended December 31, 2023 the amount that was reported as gross profit which was reported as $983,372,000 should have been $938,372,000. Aside from that clerical error all other numbers on the press release are correct. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company achieved record fourth quarter net sales of $1.73 billion in the 2023 fourth quarter, 14.4% higher than net sales of $1.51 billion in the 2022 comparable period and 16.1% higher on a foreign currency adjusted basis. Gross profit as a percentage of net sales for the 2023 fourth quarter was 54.2% compared to 51.8% in the comparative 2022 fourth quarter. As a result of the Bang Inventory Step-Up, gross profit was adversely impacted by approximately $5 million during the 2023 fourth quarter. Gross profit as a percentage of net sales was 54.5% for the 2023 fourth quarter, excluding the Bang Inventory Step-Up. The increase in gross profit as a percentage of net sales for the 2023 fourth quarter as compared to the 2022 fourth quarter was primarily the result of pricing actions, decreased freight-in costs and lower input costs. During this call, we will talk about impairment charges of approximately $39.9 million recorded in the 2023 fourth quarter related to the Alcohol Brands segment due in part to the continuing challenges in the craft beer and seltzer categories. We will refer to these charges as the alcohol impairment charges. The alcohol impairment charges related to certain non-amortizing intangibles as well as property and equipment acquired as part of the CANarchy transaction. Operating expenses for the 2023 fourth quarter were $504.4 million compared to $390 million in the 2022 fourth quarter. Operating expenses for the 2023 fourth quarter included the alcohol impairment charges. As a percentage of net sales, operating expenses for the 2023 fourth quarter were 29.2% compared with 25.8% in the 2022 fourth quarter. Exclusive of the alcohol impairment charges as a percentage of net sales, operating expenses for the 2023 fourth quarter were 26.8%. Distribution expenses for the 2023 fourth quarter were $79.6 million or 4.6% of net sales compared to $76.1 million or 5% of net sales in the 2022 fourth quarter. Operating income for the 2023 fourth quarter increased 10% to $434 million from $394.4 million in the 2022 comparative quarter. Operational income adjusted for the Bang Inventory Step-Up and the alcohol impairment charges increased 21.4% to $478.9 million for the 2023 fourth quarter. The effective tax rate for the 2023 fourth quarter was 18.5% compared with 23.3% in the 2022 fourth quarter. The decrease in the effective tax rate was primarily attributable to an increase in the stock compensation deduction. Net income increased 21.6% to $367 million as compared to $301.7 million in the 2022 comparable quarter. Net income adjusted for the Bang Inventory Step-Up and the alcohol impairment charges, net of tax, increased 33.1% to $401.5 million for the 2023 fourth quarter. Diluted earnings per share for the 2023 fourth quarter increased 22.3% to $0.35 from $0.29 in the fourth quarter of 2022. Diluted earnings per share adjusted for the Bang Inventory Step-Up and the alcohol impairment charges, net of tax, was $0.38 for the 2023 fourth quarter, an increase of 33.8%. The company has implemented price increases in the first quarter of 2024 in certain international markets. We are continuing to monitor opportunities for further pricing actions in both the United States and internationally. The company continues to have market share leadership in the energy drink category for all outlets combined in the United States in both the 13-week and 4-week periods ended February 17, 2024. According to Nielsen reports for the 13 weeks through February 17, 2024, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 5.5% versus the same period a year ago. Sales of the company's energy brands, excluding Bang, were up 0.9% in the 13-week period. Sales of Monster declined 0.7%. Sales of Reign were up 21.6%. Sales of NOS increased 5.1%. And sales of Full Throttle increased 3.6%. Sales of Red Bull increased 2.9%. According to Nielsen, for the 4 weeks ended February 17, 2024, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots, in dollars, increased 3.7% over the same period the previous year. Sales of the company's energy brands, excluding Bang, decreased 0.1% in the 4-week period in the convenience and gas channel. Sales of Monster decreased by 2% over the same period versus the previous year. Reign sales increased 17.2%. NOS sales were up 6%, and Full Throttle was up 1.7%. Sales of Red Bull were up 3.8%. According to Nielsen, for the 4 weeks ended February 17, 2024, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased from 36.9% to 35.5%, excluding Bang. Including Bang, the company's market share is 37%. Monster share decreased from 30.8% a year ago to 29.1%. Reign's share increased 0.3 of a share points to 3%. NOS share increased 0.1 of a share point to 2.7%, and Full Throttle share remained at 0.7%. Bang share was 1.4%. Red Bull share increased 0.1 of a share point to 35.1%. Market share of certain competitors were as follows: CELSIUS 8.1%, C4 3.5%, 5-Hour 3.4%, Rockstar 3.2%, and GHOST 2.9%. According to Nielsen, for the 4 weeks ended February 17, 2024, sales in dollars of the coffee plus energy drink category, which includes our Java Monster line, in the convenience and gas channel, decreased 10.3% over the same period the previous year. Sales of Java Monster, including Java Monster 300 and Java Monster Nitro Cold Brew were 4.6% lower in the same period versus the previous year. Sales of Starbucks Energy were 16.9% lower. Java Monster share of the coffee plus energy drink category for the 4 weeks ended February 17, 2024, was 58.2%, up 3.5 points, while Starbucks Energy share was 41.5%, down 3.3 points. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended January 27, 2024, the energy drink category increased 9.2% in dollars. Sales of the company's energy drink brands increased 8.6% versus a year ago. The market share of the company's energy drink brands decreased 0.2 of a point to 41.3%. Monster's sales increased 9%, and its market share decreased 0.1 of a point to 37.3%. NOS sales decreased 5.1% and its market share decreased 0.2 of a point to 1.2%. Full Throttle sales increased 24.6%, and its market share increased 0.1 of a point to 0.6%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 10.9% for the month of January 2024. Monster sales increased 10.5%. Monster's market share in value decreased 0.1 of a point to 29.4% against the comparable period the previous year. Sales of Predator increased 23.2%, and its market share increased 0.6 of a share point to 5.6%. The Nielsen statistics for Mexico cover a single month, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for all outlets combined, in Brazil, the energy drink category increased 19.9% for the month of January 2024. Monster sales increased 33.6%. Monster's market share in value increased 4.7 points to 45.8% compared to January 2023. In Argentina, due in part to hyperinflation, the energy drink category increased 167.2% for the month of January 2024. Monster sales increased 178.2%. Monster's market share in value increased 2.2 points to 55.8% compared to January 2023. In Chile, the energy drink category increased 1.8% for the month of January 2024. Monster sales decreased 2.2%. Monster's market share in value decreased 1.7 points to 40.5%. Monster Energy remains the leading energy brand in value in Argentina, Brazil and Chile. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period until the end of January 2024, Monster's retail market share in value as compared to the same period the previous year grew from 14.9% to 16.3% in Belgium; from 31% to 31.6% in France; from 30.8% to 33.2% in Great Britain; from 4.9% to 6.2% in the Netherlands; from 32.7% to 34.4% in Norway; and from 40.5% to 40.9% in Spain. According to Nielsen, in the 13-week period ended until the end of December 2023, Monster's retail market share in value as compared to the same period the previous year grew from 20.1% to 22.4% in the Czech Republic; from 13.7% to 17.1% in Germany; from 30.2% to 31.1% in Italy; and from 27.6% to 30.1% in the Republic of Ireland. According to Nielsen, in the 13-week period until the end of December 2023, Monster's retail market share in value as compared to the same period the previous year remained flat at 18.6% in Poland. Monster's retail market share in value as compared to the same period the previous year declined from 27.8% to 27% in Denmark; from 37% to 36.1% in Greece; from 19.8% to 19.2% in South Africa; and from 15.7% to 15.5% in Sweden. According to Nielsen, in the 13-week period until the end of December 2023, Predator's retail market share in value as compared to the same period the previous year grew from 32.1% to 33.7% in Kenya and from 19.2% to 21% in Nigeria. According to IRI, for all outlets combined in Australia, the energy drink category increased 13% for the 4 weeks ending February 11, 2024. Monster sales increased 32.5%. Monster's market share in value increased 2.9 points to 19.4% against the comparable period the previous year. Sales of Mother increased 10.5%, and its market share decreased 0.2 of a share point to 10.8%. This period marks the first time that the company's total market share exceeded 30%. According to IRI for all outlets combined in New Zealand, the energy drink category increased 9% for the 4 weeks ending February 11, 2024. Monster sales increased 33%. Monster's market share in value increased 2.6 points to 14.6% against the comparable period the previous year. Sales of Mother increased 14.4%, and its market share increased 0.3 of a share point to 6.4%. Sales of Live+ decreased 5%, and its market share decreased 0.8 of a share point to 5.2%. According to INTAGE, in the convenience channel in Japan, the energy drink category decreased 0.2% for the month of January 2024. Monster's sales increased 6.9%. Monster's market share in value increased 3.9 points to 59.4% against the comparable period the previous year. According to Nielsen, for all outlets combined in South Korea, the energy drink category increased 17.2% for the month of January 2024. Monster sales increased 5.5%. Monster's market share in value decreased 5.9 points to 53.6% against the comparable period the previous year. We again point out that certain market statistics that cover single months or 4-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $637 million, 36.8% of total net sales in the 2023 fourth quarter compared to $542.5 million or 35.9% of total net sales in the corresponding quarter in 2022. Foreign currency exchange rates had a negative impact on net sales in the U.S. -- in U.S. dollars by approximately $27.1 million in the 2023 fourth quarter. In EMEA, net sales in the 2023 fourth quarter increased 10.4% in dollars, and increased 11.1% on a currency-neutral basis over the same period in 2022. Gross profit in this region as a percentage of net sales for the fourth quarter was 32.7% compared to 33.9% in the same quarter in 2022 and 31.1% in the 2023 third quarter. We are also pleased that in the 2023 fourth quarter, Monster gained market share in Belgium, the Czech Republic, France, Germany, Great Britain, Italy, the Netherlands, Norway, the Republic of Ireland and Spain. In Asia Pacific, net sales in the 2023 fourth quarter increased 3.7% in dollars, and increased 5.1% on a currency-neutral basis over the same period in 2022. Gross profit in this region as a percentage of net sales for the fourth quarter was 40.1% versus 42.6% in the same period in 2022 and 43.2% in the 2023 third quarter. Net sales in Japan in the 2023 fourth quarter decreased 2.3% in dollars and increased 0.9% on a currency-neutral basis. In South Korea, net sales in the 2023 fourth quarter decreased 5.1% in dollars and decreased 9.4% on a currency-neutral basis as compared to the same quarter in 2022. Monster remains the market leader in Japan and South Korea. In China, case sales in the 2023 fourth quarter increased 51% in cases as compared to the same quarter in 2022. We remain optimistic about the long-term prospects for the Monster brand in China and are excited about the launch of Predator this year. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 41.4% in dollars and increased 43.4% on a currency-neutral basis. In Latin America, including Mexico and the Caribbean, net sales in the 2023 fourth quarter increased 37.2% in dollars and increased 56.1% on a currency-neutral basis over the same period in 2022. Gross profit in this region as a percentage of net sales was 38.4% for the 2023 fourth quarter versus 28.4% in the 2022 fourth quarter and 37.7% in the 2023 third quarter. In Brazil, net sales in the 2023 fourth quarter increased 76.7% in dollars and increased 66.1% on a currency-neutral basis. Net sales in Mexico increased 39.5% in dollars and increased 23.7% on a currency-neutral basis in the 2023 fourth quarter. Net sales in Chile increased 21.6% in dollars and increased 17.6% on a currency-neutral basis in the 2023 fourth quarter, and net sales in Argentina increased 36.8% in dollars and increased 219.6% on a currency neutral basis in the 2023 fourth quarter. During the first quarter of 2024, we announced that CANarchy Craft Brewery Collective, or what we referred to as CANarchy, will operate under the name Monster Brewing Company. This change will better align the business with our brand equity. We continue with the expanded distribution of The Beast Unleashed during the fourth quarter of 2023, which are now available in 48 states through a network of beer distributors. We have commenced with the rollout of The Beast Unleashed in 24-ounce single-serve cans in the convenience and gas channel. We are pleased with the results of The Beast Unleashed and are continuing to expand points of distribution of this brand. Nasty Beast Hard Tea was launched in January of 2024, and is now available in 40 states with a goal of national distribution by midyear. Nasty Beast Hard Tea is available in 4 flavors and is available in 24-ounce single-serve cans as well as a variety 12-pack of 12-ounce sleek cans. Early response to the brand has been very positive. In the U.S., during the 2023 fourth quarter, we expanded NOS Original with a zero sugar offering, NOS Zero Sugar. Our pipeline innovation continues in the first quarter of 2024. In January, we launched 2 additional flavors of Reign Storm, Guava Strawberry and Citrus Zest to add to the 4 flavors already in distribution. We are planning to launch 2 additional Reign Storm flavors, Apricot Strawberry and Mango in March 2024, bringing the total number of Reign Storm flavors to 8. In February, we launched Monster Energy Ultra Fantasy Ruby Red in 16-ounce and 12-ounce sleek cans. We also launched Monster Rehab Green Tea, Reign Total Body Fuel Sour Gummy Worm, Monster Juice Rio Punch, Java Monster Irish Cream and Monster Reserve Peaches and Cream. Additionally, in the first quarter of 2024, we continue to innovate in our multipack and variety pack offerings. In Canada, during the first quarter of 2024, we launched several new innovations. In January, we launched Monster Energy Ultra Strawberry Dreams in 2 package sizes as well as Reign Total Body Fuel Cherry Limeade and Monster Reserve Orange Dreamsicle. In early February 2024, we launched Monster Energy Zero Sugar in a 710 ml receivable package as well as Monster Rehab Wild Berry Tea. In Latin America, during the fourth quarter of 2023, we launched several new innovations. In Brazil, we launched Monster Pipeline Punch. In Uruguay, we launched Monster Ultra Sunrise. And in Chile, we launched Monster Aussie Style Lemonade. In Colombia and Guatemala, we launched Monster Reserve White Pineapple. In Peru, we launched Fury Gold Strike, an affordable energy brand. In Latin America, during the first quarter of 2024, several new flavors have been introduced. In Mexico, we continued to expand our affordable portfolio and introduced Predator Tropical. In the 2023 fourth quarter in New Zealand, we launched Monster Energy Ultra Peachy Keen. In Australia, during the first quarter of 2024, we launched Monster Energy Zero Sugar, Monster Energy Ultra Strawberry Dreams and Monster Juice Papillon. In EMEA, in the fourth quarter of 2023, we launched Monster Juice Monarch, Nitro Cosmic Peach, Reserve Orange Dreamsicle and Ultra Peachy Keen in a number of countries. Monster Energy Zero Sugar was launched in Great Britain, Ireland and Poland in the second half of 2023, with additional launches planned throughout EMEA in 2024. During the fourth quarter of 2023, we launched Monster Aussie Lemonade in Japan, Monster Ultra Paradise in Malaysia, Monster Mango Loco and Pipeline Punch in Kazakhstan and Monster Mango Loco in the Philippines. In February 2024, we introduced Predator Gold Strike in Azerbaijan and in the Philippines. During the 2023 fourth quarter, the company purchased approximately 0.8 million shares of its common stock at an average purchase price of $54.57 per share, for a total amount of $43.2 million, excluding broker commissions. As of February 27, 2024, approximately $642.4 million remained available for purchase under the previously authorized repurchase program, that is dollars. We estimate on a foreign currency adjusted basis, including the Alcohol Brands segment, January 2024 sales were approximately 20.5% higher than the comparable period January 2023 sales, and 19.7% higher than January 2023, excluding the Alcohol Brands segment. We estimate January 2024 sales, including the Alcohol Brands segment to be approximately 17.8% higher than in January 2023 and 17% higher than in January 2023, excluding the Alcohol Brands segment. January 2024 had one more selling day compared to January 2023. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be in future to or regarded as indicative of results for a full quarter or any future period. In conclusion, I'd like to summarize some recent positive points. One, the energy category continues to grow globally. Two, we are pleased to report that our pricing actions have not significantly impacted consumer demand. Three, our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. We are in the process of constructing a juice facility at our AFF flavor facility in Ireland. We have a robust innovation plan for 2024. The Beast Unleashed is performing to expectations. We're excited for Nasty Beast Hard Tea as well as the additional alcohol opportunities that Monster Brewing Company presents. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in a number of additional countries internationally. We are excited about the opportunities that the acquisition of the Bang Energy brand presents to us and believe that the brand will fit well within our broader portfolio of energy drink brands. And lastly, the company achieved record fourth quarter net sales of $1.73 billion in the 2023 fourth quarter, 14.4% higher than net sales of $1.51 billion in the 2022 comparable period and 16.1% higher on a foreign currency adjusted basis. I would now like to open the floor to questions about the quarter and the 2023 year. Thank you. Operator: [Operator Instructions] Our first question today is from Peter Grom with UBS. Please go ahead. Peter Grom: Thanks, operator and good afternoon everyone. Hope you're doing well. So I wanted to ask a question specifically on gross margin. Clearly, the quarter came in a bit better relative to some of the commentary from the investor meeting. Maybe first, did something surprise you in the quarter? And then second, just going back to that same commentary from the investor meeting, there seem to be a lot of optimism that the gross margin trajectory would improve nicely from 4Q looking out to '24. I know you don't give guidance specifically, but just any thoughts on how we should think about the margin trajectory given the very strong exit rate? Thanks. Hilton Schlosberg: So I think at the Investor Meeting, as I recall, we already spoke about 2023 Q4. As you know, we don't give guidance, and we really do try not to give guidance. So if I could just talk about Q4 for a minute, Q4 was strong. But there were a number of really nonrecurring items included in GP in Q4, mainly related to true-ups of various promotional items, various true-ups with partners as well as -- we have a few, we don't have very many, but we have a number of rebate programs. So looking at Q4 of 2023, I would say to you that on an ongoing basis, Q4 came up very much in line with what we expected, which was an increase over Q3. And it's at the level probably of about 53.5% on a kind of standalone basis excluding these nonrecurring items. Operator: The next question is from Filippo Falorni with Citi. Please go ahead. Filippo Falorni: Hey, good afternoon, guys. I wanted to ask you about the energy drink category in the U.S. We've seen a bit of a slowdown in January. How much do you think it was the weather? How much would you think we're some other external factor on the consumer? And then maybe you can comment a bit on market share trends in the U.S. We've seen a little bit of pressure on the core Monster brand. So any color you could give would be helpful. Hilton Schlosberg: Yes. Firstly, I don't think one should discount the fact that the weather was a factor. Secondly, we do have a lot of non-measured channels. And if you heard earlier in the call, January sales were -- in my book, were really impressive, the increase in January sales. Added to that, Nielsen doesn't cover everything, as we've discussed before, and there were some interesting things in January, for example, one of the big club store chains had what we call an MVM, which is a club store chain that is not read by Nielsen, and in itself is pretty substantial. Adding to that, if you go back to January 2023, we had very robust increases mainly because of the launch of 2 brands that really hit it out of the park. One was Monster Zero Sugar and the other was Ultra Strawberry Dreams. On the call, you would have heard that innovation for 2024 has really kicked off in February and is going through February through to March, so we didn't have the benefit of that innovation program earlier on as we did in 2023. So these are all factors that one must take into account when one examines so-called slowness in the Nielsen volumes. Also, I might add that we have a number of important resets coming up, the trade reset from January on through the early part of the second quarter. So -- and we're anticipating big gains in shelf space not only for our legacy brands, not only for the SKUs that we are about to launch, but also for the Bang brand, where a number of retailers that had hitherto really discontinued Bang because of all the litigation and all of the issues are now taking it back, and we'll see that benefit starting really in the second quarter and -- sorry, starting in the first quarter and moving into the second quarter. So there's a whole number of factors that I think are worth bearing in mind when one looks at the Nielsens, for example, in January. Operator: The next question is from Andrea Teixeira with JPMorgan. Please go ahead. Andrea Teixeira: Thank you, operator. Just you said that you continue to look at opportunities for pricing in the U.S. What is preventing you to announce pricing at this point? Do you see -- I mean, obviously, the key competitor announced pricing back when we all saw you here in New York, you were talking about potentially looking at the impact of elasticities. It seems that things have been moderately positive. Is there any reason why you'd wait? And then second, Hilton, when you spoke about a normalized gross profit margin of 53.5%. Should we expect margins to continue to build from here given that potentially the high 50s, it's still below where you were before the pandemic at 60. Is there any reason why these new plans would not leverage as fast or any structural reasons that you would be below the high 50s? Hilton Schlosberg: No, the only structural reason is we don't give guidance. So that's the only structural reason I can think of. Obviously, we're working on margins. I'm proud to say that the Midwest premium and aluminum, which is one of [indiscernible] are coming down. But against that, we've said that we have increases in other commodities and other pricing. So we're bringing up our own manufacturing facilities up and we're doing whatever we can to improve gross profit percentages. But we don't give guidance and I don't know what's going to happen with freight, for example. We had a good benefit from freight-in this quarter -- this last quarter, and I'm not sure what's going to happen as we look forward into 2024 and the implications of the election and everything else. So that's about that. And then on pricing, we're taking pricing in a number of markets internationally. We've taken pricing in January in a number of markets. And we're moving through with an aggressive price increase program internationally. As regards to the U.S., we really are just -- we're waiting and evaluating. We run a very sizable business here. We have a number of customers that we deal with. And we want to make the right decision. So we're not saying no to a price increase, and we're not saying yes to a price increase this time. What we are saying is that we are honestly really evaluating and constantly evaluating the retail pricing environment. And if we believe there are opportunities, we will take them. Operator: The next question is from Dara Mohsenian from Morgan Stanley. Please go ahead. Dara Mohsenian: Hi, guys. Good afternoon. So the comments on some of the U.S. performance were helpful. Just given the strength of that global January number, can you spend some time discussing what you're seeing internationally in terms of category growth and your market share progression? And any thoughts on maybe key expansion plans internationally in terms of some of your key brands and how we should think about that for 2024? Thanks. Hilton Schlosberg: So, Dara, on the call, we did talk about progress internationally in very great detail. I think sometimes we give far more detail than we should, but we do. We gave market shares in various countries we indicated the new product innovations that are going to happen through -- throughout our international territories, and I'm not sure what other question -- what part of your question, we possibly have an answer. And I don't mean to be disrespectful. I just feel that a lot of your question has been covered. Rodney, I don't know if you've got anything to add. Rodney Sacks: No. Other than the -- there's -- if you look at the international markets, they've sort of been a little bit all over the place in many ways. But generally, they've been good. There was a little bit of slowing in Asia Pacific. We are taking steps to see some growth. But obviously, we are very substantial in those markets and the actual markets have been a little flatter. But we've got great opportunity in some of the international markets that are developing. We look particularly to markets like China and India. We're at the beginning of a growth phase in India, particularly focusing on not only Monster, but also Predator there. So I think that it is mixed. Some of the markets have had some sort of ups and downs, but overall, we're in growth in most of the markets, and we still see that as very exciting. And you can see from the results in January, we are still seeing -- despite the Nielsen numbers, we are still seeing good growth in the U.S. as well. Operator: The next question is from Steve Powers with Deutsche Bank. Please go ahead. Steve Powers: Yes. Hey, good afternoon, guys. Two questions for me, if I could. The first one is just on G&A expenses in the quarter. They were up a lot relative to our expectations of almost 25% in the fourth quarter. Just anything to unpack there and anything anomalous in that number? Hilton Schlosberg: Yes, we spoke about -- Steve, sorry to interrupt, but let's just answer the first. So remember, we spoke about impairment charges of $40 million in this quarter relating to the Alcohol Brands. Steve Powers: Yes. Sorry, I'm excluding that. It's still up a lot, excluding the impairment charges. Hilton Schlosberg: We'll look at that, but it's not what I've been seeing. Steve Powers: Okay. The second question is, in January, you highlighted plans just to step up focus on in-market execution in the U.S., specifically commercialization around placing of the full portfolio and innovation. And just any update you can share on progress made and cooperation you're getting on the -- from the Coke system on that effort? Hilton Schlosberg: Yes. I think that's not a one-fix issue. That's something that's ongoing, and we are working with the Coke bottlers to improve execution. As I said earlier, we are rolling out a number of new products and the new sets are all taking place in this first quarter from February onwards and early into the second quarter. And I think you'll see that -- well, I hope you'll see from those numbers when we report them, that the positioning should be somewhat different to where we are today. Operator: The next question is from Mark Astrachan with Stifel. Please go ahead. Mark Astrachan: Yes. Hey, afternoon guys. I wanted to go back to international because I feel like it's one of those things that doesn't get the credit that's due, right? You built nearly a $3 billion run rate business at this point. And I think from the outside, it's a little bit hard to get a sense of kind of what's going on there. So not necessarily to Dara's question, but maybe talk to some of the dynamics in terms of number of SKUs that you have on shelf, not obviously by country, but sort of broader strokes of the opportunity you have to still develop your portfolio within those markets? How much opportunity is there broadly to develop the energy category? And sort of related to that, margins have improved, but they're obviously still a lot lower than your domestic margins, both gross margin and EBIT margin in that international business. How do you think about improving that over time? Is that possible relative to current levels? And kind of how do you think about the progression of that? Hilton Schlosberg: We've always spoken about the fact that internationally, we compete very strongly against -- in the main Red Bull. And we really try and keep our pricing. We have a pricing strategy that's worked well for us, and that's really keeping within a particular percentage of Red Bull pricing. And the minute we stray from that, we find that our market shares really suffers. So we really have an interesting dynamic in that we have, obviously, relationships with The Coke partners. And we have a pricing structure that kind of has a ceiling, right? So it's -- while we are always on a mission to improve gross margins, and we do that on an ongoing basis, there are some areas where it is very difficult to get gross margin. And I've said this before, that I think it will be very difficult in the main to get gross margins internationally to the levels that we have enjoyed in the U.S. You can see what happened in EMEA. They nudged their margins up by 1% in the fourth quarter. And it's an ongoing battle to improve margins, bearing in mind the dynamics of what we are working against. Operator: This concludes -- I'm sorry, go ahead, sir. Rodney Sacks: Sorry, I just finish the other part of the question that Mark had raised just before we sign off. Just to talk about the international opportunity, I think what Mark is alluding to is correct. In many markets, the international markets have really followed the U.S. We have a far broader portfolio in the U.S. Innovation continues from year to year. But what -- the benefit that the international markets have is they see what we've introduced in the U.S. and the large number of additional SKUs and literally brand families we have in the U.S. And they're able to try and look to those and try and introduce selected SKUs, which gives them a very large runway. In some markets, the runway is focused on the Monster premium brands. And in some markets, the growth is coming from an affordable sector. And we have addressed that. So we have Monster in many markets, but we've also -- where we see that the premium sector has more of a limited percentage of the population that can really afford to have the buying power. We are growing, and that's where we're starting to grow brands like Predator in many international markets and that will help us continue to see growth and Predator also has a lot of depth. We were launching Predator in China this year. We've just launched Predator in India in cans. We are now just rolling out PET in India. We are trying to address some volume production issues because there's not a lot of availability, but that will sort itself out reasonably soon. And we see enormous opportunity once we get some availability for production in PET for PET in India. So there are a lot of opportunities, but they vary from market to market and continent to continent. As you know, we've just recently launch, for example, in Egypt, we launched both Monster and Predator. Predator's quickly made a name for itself as a growing brand. So we have these opportunities in different countries around the world. And so we're quite excited about seeing that. As I said, we did have some slowdown in some of the more developed countries in Asia. The category slowed, but I think that those -- we are taking steps to address and introduce more and different innovation in those markets and to grow them. So we do look forward to having a really attractive runway around the world for us. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Rodney Sacks for any closing remarks. Rodney Sacks: 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 innovate, to develop and differentiate our brands and to expand the company both at home and abroad, and in particular, capitalizing on our relationship with the Coca-Cola bottler system. We believe that we are well-positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain safe and healthy, and thank you very much for your attendance. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good afternoon. And welcome to the Monster Beverage Company Third Quarter 2023 Conference call. All participants will be in 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 Rodney Sacks and Hilton Schlosberg, Co-CEOs. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I am Rodney Sacks. Hilton Schlosberg, our Vice Chairman and my Co-Chief Executive Officer is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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. 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, 2023 and quarterly reports on Form 10-Q, 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 obligations to update any forward-looking statements whether as a result of new information, future events, or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. On July 31, 2023, the company completed its acquisition of Bang Energy, which is the Bang Transaction. The acquired assets primarily include Bang Energy Drinks and a beverage production facility in Phoenix, Arizona. Inventory purchased as part of the Bang Transaction was recorded at fair value. Certain of the purchased inventory was subsequently sold in the 2023 third quarter and was recognized through cost of sales at fair value, which we define as the Bang Inventory Step-Up hereafter in the call. As a result of the Bang Inventory Step-Up, gross profit was adversely impacted by approximately $7.8 million during the 2023 third quarter. During the 2023 third quarter, in connection with the Bang Transaction, the company recorded a gain of $45.4 million, which will be referred to hereinafter as the Bang Transaction Gain, in interest and other income and expense net within the condensed consolidated statement of income. During the 2023 third quarter, the company incurred approximately $8 million of acquisition expenses related to the Bang Transaction and those are referred to also later in this call as the Bang Transaction Expenses. The company achieved record third quarter net sales of $1.86 billion in the 2023 third quarter, 14.3% higher than net sales of $1.62 billion in the 2022 comparable period and 16.1% higher on a foreign currency adjusted basis. Gross profit as a percentage of net sales for the 2023 third quarter was 53%, compared with 51.3% in the comparative 2022 third quarter. Gross profit as a percentage of net sales was 53.4% for the 2023 third quarter, excluding the Bang Inventory Step-Up. The increase in gross profit as a percentage of net sales for the 2023 third quarter as compared to the 2022 third quarter was primarily the result of pricing actions, decreased freight-in costs and decreased aluminum can costs. Promotional allowances for the 2023 third quarter were higher than in the comparable 2022 third quarter, as well as the 2023 second quarter. Operating expenses for the 2023 third quarter were $473.2 million, compared with $415.8 million in the 2022 third quarter. As a percentage of net sales, operating expenses for the 2023 third quarter were 25.5%, compared with 25.6% in the 2022 third quarter. Operating expenses for the 2023 third quarter included approximately $8 million of Bang Transaction-related expenses. Distribution expenses for the 2023 third quarter were $85.7 million or 4.6% of net sales, compared to $83 million or 5.1% of net sales in the 2022 third quarter. Operating income for the 2023 third quarter increased to 22.2% to $510.5 million from $417.9 million in the 2022 comparative quarter. Interest and other income expense net for the 2023 third quarter increased to $71.4 million from $2.1 million in the 2022 comparative quarter. The increase was due to $39.3 million of interest income and a gain of $45.4 million related to the Bang Transaction. Such amounts were partially offset by foreign currency transaction losses of $13.2 million. The effective tax rate for the 2023 third quarter was 22.2%, compared with 23.3% in the 2022 third quarter. The decrease in the effective tax rate was primarily attributable to an increase in deductible interest expense. Net income increased 40.4% to $452.7 million, as compared to the $322.4 million in the 2022 comparable quarter. Diluted earnings per share for the 2023 third quarter increased 41.3% to $0.43 from $0.30 in the third quarter of 2022. Diluted earnings per share adjusted for the Bang Transaction Gain, the Bang Inventory Step-Up and the Bang Transaction Expenses net of tax was $0.41 for the 2023 third quarter, an increase of 34.1%. The company plans to implement additional price increases in certain international markets during the remainder of the 2023 year. We will continue to review further opportunities for pricing actions in order to mitigate inflationary pressures. According to the Nielsen reports, for the 13 weeks through October 21, 2023, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category including energy shots increased by 9.2% versus the same period a year ago. Sales of the company’s energy brands excluding Bang were up 6.7% in the 13-week period, sales of Monster were up 4.8%, sales of Reign were up 36.3%, sales of NOS increased 10% and sales of Full Throttle increased 7.6%. Sales of Red Bull increased 3%. The company continues to have market share leadership in the energy drink category for all outlets combined in the United States in both the 13-week and four-week periods ended October 21, 2023. According to Nielsen, for the four weeks ended October 21, 2023, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars increased 6.7% over the same period the previous year. Sales of the company’s energy brands, excluding Bang, increased 4.5% in the four-week period in the convenience and gas channel. Sales of Monster increased by 1.9% over the same period versus the previous year. Reign sales increased 35.2%, NOS was up 9.7% and Full Throttle was up 7.8%. Sales of Red Bull were up 1.8%. According to Nielsen, for the four weeks ended October 21, 2023, the company’s market share of the energy drink category in the convenience and gas channel including energy shots in dollars decreased from 36.8% to 36.1%, excluding Bang. Monster share decreased from 31.1% a year ago to 29.7%. Reign share increased 0.6 of a share point to 3%, NOS share increased share increased 0.1% of a share point to 2.6% and Full Throttle share remained at 0.7 of a percent. Bang share was 1.4%. Red Bull share decreased 1.7 points to 34.5, Five Hour share was lower by half a point at 3.5%, Rockstar share was down 0.4 of a point to 3.4%, Celsius’ share is 7.4%, C Four’s share is 3.3% and Ghosts’ share is 2.7%. According to Nielsen, for the four weeks ended October 21, 2023, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased 8.9% over the same period the previous year. Sales of Java Monster including Java Monster 300 and Java Monster Nitro Cold Brew were 2% lower in the same period versus the previous year. Sales of Starbucks Energy was 14.9% lower. Java Monster share of the coffee plus energy drink category for the four weeks ended October 21, 2023, was 55.9%, up 3.9 points, while Starbucks Energy’s share was 43.8%, down 3.1 points. According to Nielsen, in all major channels in Canada for the 12 weeks ended October 7, 2023, the energy drink category increased 8.6% in dollars. Sales of the company’s energy drink brands increased 6.5% versus a year ago. The market share of the company’s energy drink brands was 40%, down 0.8 of a point. Monster sales increased 7.7% and its market share decreased 0.3 of a point to 36.2%. NOS sales decreased half a point and its market share decreased by 0.1 of a point to 1.2%, sorry, the sales decreased 5 point -- 0.5%. Full Throttle sales increased 12.8% and its market share remained at 0.5%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 20% for the month of September 2023, Monster sales increased 22.7%, Monster’s market share in value increased 0.7 points to 29.3% against the comparable period the previous year. Sales of Predator increased 60.3% and its market share increased 1.5 share points to 6.1%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced, positively and/or negatively by sales in the OXA convenience chain, which dominates the market. Sales in the OXA convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for the month of September 2023 compared to September 2022, Monster’s retail market share in value increased in Argentina from 52.8% to 56.8%, in Brazil from 43% to 45.1% and decreased in Chile from 41.7% to 39.9%. Monster Energy is the leading energy brand in value in Argentina, Brazil, and Chile. I would like to point out, the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen, in the 13-week period until October 8, 2023, Monster’s retail market share in value as compared to the same period the previous year grew from 30.5% to 31.3% in France, from 29.9% to 32.4% in Great Britain, from 5.4% to 5.6% in the Netherlands, from 31.6% to 34.7% in Norway and from 40.3% to 40.5% in Spain. According to Nielsen, in the 13-week period until the end of September 2023, Monster’s retail market share in value as compared to the same period the previous year grew from 15.6% to 18.4% in Germany, Monster’s retail market share in value as compared to the same period of the previous year remained flat at 31.6% in Italy, Monster’s retail market share value as compared to the same period the previous year declined from 19% to 18.4% in Poland and from 19.8% to 17.9% in South Africa. According to Nielsen, in the 13-week period ended September 10, 2023, Monster’s retail market share in value as compared to the same period the previous year grew from 15.4% to 16.8% in Belgium, from 19.3% to 21.3% in the Czech Republic, from 28% to 30% in the Republic of Ireland and from 15.4% to 16% in Sweden. According to Nielsen, in the 13-week period until the end of August 2023, Monster’s retail market share in value as compared to the same period the previous year declined from 38.8% to 38.2% in Greece. According to Nielsen, in the 13-week period until the middle of August 2023, Monster’s retail market share in value as compared to the same period the previous year grew from 27.5% to 28% in Denmark. According to Nielsen, in the 13-week period until the end of August 2023, Predators retail market share in value as compared to the same period the previous year, grew from 29.8% to 32.8% in Kenya and from 17% to 20.3% in Nigeria. According to IRI in Australia, Monster’s market sharing value for the four weeks ending October 15, 2023, increased from 14.8% to 16.4% as compared to the same period the previous year. Mother’s market sharing value decreased from 11.7% to 10.1%. Going to IRI in New Zealand, Monster’s market sharing value for the four weeks ended October 22, 2023, decreased from 13.6% to 13.3% compared to the same period the previous year, Live Plus’ market sharing value decreased from 6.2% to 5.2% and Mother’s market sharing value increased from 6.1% to 6.4%. According to INTAGE in Japan, in the month ending September 2023, Monster’s market sharing value in the convenience store channel as compared to the same period the previous year increased from 55% to 58.9%. According to Nielsen in South Korea, in the month ending September 2023, Monster’s market sharing in value in all outlets combined, as compared to the same period the previous year, decreased from 61.4% to 51.9% due to overly aggressive price promotions by a competitor. We again point out that certain market statistics that cover single months or four-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. was $733.7 million or 39.5% of total net sales in the 2023 third quarter, compared to $610.6 million or 37.6% of total net sales in the corresponding quarter in 2022. Foreign currency exchange rates had a negative impact on net sales in the U.S. dollars by approximately $29.2 million in the 2023 third quarter. Included in reported geographic sales, our ourselves to the company’s military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2023 third quarter increased 22.3% in dollars and increased 23.6% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales for the third quarter was 31.1%, compared to 34.7% in the same quarter in 2022. We are also pleased that in the 2023 third quarter, Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, the Netherlands, Norway, the Republic of Ireland, Spain and Sweden. In Asia-Pacific, net sales in the 2023 third quarter increased 16.8% in dollars and increased 21.9% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales increased to 43.2% from 37.4% over the same period in 2022. Net sales in Japan in the 2023 third quarter increased 22.5% in dollars and increased 29% in local currency. In South Korea, net sales increased 18.7% in both dollars and local currency as compared to the same quarter in 2022. Monster remains the market leader in Japan and South Korea. In China, net sales in the third quarter increased 20.2% in dollars and increased 28.3% in 28.3% in local currency as compared to the same quarter in 2022. We remain optimistic about the prospects for the Monster brand in China. In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam, net sales increased 13.3% in dollars and increased 18.7% in local currencies. In Latin America, including Mexico and the Caribbean, net sales in the 2023 third quarter increased 25.2% in dollars and increased 38.8% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales was 37.7% for the 2023 third quarter versus 34.7% in the 2022 third quarter. In Brazil, net sales in the 2023 third quarter decreased by 4.3% in dollars and decreased by 9.6% in local currency, due in part to inconsistent purchasing patterns by our bottlers. Net sales in Mexico increased 54.4% in dollars and increased to 30.1% in local currency in the 2023 third quarter. Net sales in Chile increased 60.2% in dollars and increased 44.3% in local currency in the 2023 third quarter. Net sales in Argentina increased 61% in dollars and increased 243.4% in local currency in the 2023 third quarter. We continued with the launch of the Beast Unleashed during the quarter, which is now available in 43 states, through a network of beer distributors. We are pleased with the initial results of the Beast Unleashed and are continuing to expand distribution with the goal of being available in substantially all of the United States by the end of 2023. We plan to launch Nasty Beast Hard Tea in the first quarter of 2024 with the goal of being national -- of national distribution in the first half of next year. Nasty Beast Hard Tea will be available in four flavors and will be sold in 24-ounce single-serve cans, as well as in a variety 12-pack of 12-ounce sleek cans. In the United States, we launched Bang Energy in 12 single SKUs and two multi-pack SKUs through our Coca-Cola bottlers in the month of September. In the 2023 third quarter, we also shipped NOS Zero-Sugar 16-ounce cans to support our planned 2023 fourth quarter launch. In Mexico, during July 2023, we launched our third Predator SKU with Predator Purple Rain and expanded our Monster Zero-Sugar offering with the launch of Monster Ultra Watermelon in August 2023. In El Salvador and Honduras, during the month of September, we launched Reserve White Pineapple. And in Puerto Rico, we launched Monster Ozzy Style Lemonade in July 2023, and in September, we introduced our Reign Storm total wellness energy drinks. In Australia, Monster Ultra Peachy Keen was launched in July 2023. In September, we launched Mother Reignbow Sherbet in Australia and Mother Lava Guava in New Zealand. In EMEA, in the third quarter of 2023, we launched Monster Nitro Cosmic Peach, Reserve Watermelon and White Pineapple, Juiced Aussie Lemonade, Juiced Chaotic, Ultra Gold and Ultra Peachy Keen in a number of countries. We are excited about the launch of Monster Zero-Sugar in Great Britain in the 2023 third quarter. We will expand distribution to Poland and the Republic of Ireland in the 2023 fourth quarter and to an additional 28 markets by the end of the first quarter of 2024. During the third quarter of 2023, we launched Monster Ultra Peachy Keen in Japan and launched Predator in Iraq. In October 2023, we launched Monster Ozzy Lemonade in Japan. In India, we participate not only in the premium energy drink segment with Monster but also in the more affordable segment with Predator. We recently introduced Predator in a 250 ml PET format in a limited region in India to complement our existing product offering is 300 ml cans. We also transitioned the Monster brand in the Philippines from our independent distributor to our Coca-Cola Philippines bottler. During the 2023 third quarter, the company purchased approximately 7.3 million shares of its common stock at an average purchase price of $54.83 per share for a total amount of $400 million, excluding broker commissions. As of November 2, approximately $282.8 million remained available for repurchase under the previously authorized repurchase program. We estimate that on a foreign currency-adjusted basis, including the alcohol brands segment, October 2023 sales were approximately 25.8% higher than in the comparable October 2022 sales and 25% higher than October 2022, excluding the alcohol brands segment. We estimate that October 2023 sales including the alcohol brands segment to be approximately 24.8% higher than in October 2022 and 24% higher than in October 2022, excluding the alcohol brands segment. October 2023 had one more selling day compared to October 2022. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives, as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules, this affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintained inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period, such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I’d like to summarize some recent positive points. The energy category continues to grow globally. We are pleased to report that our pricing actions which have been implemented to partially mitigate inflationary pressures have not significantly impacted consumer demand. Our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower land of costs to our EMEA region. We are continuing with our plans to add a Juice facility to our AFF flavor facility in Ireland. We are pleased with our 2023 new product innovations, notably Monster Energy Zero-Sugar, Ultra Strawberry Dreams and Rainstorm in the United States and Monster Energy Lewis Hamilton 44 Zero-Sugar in EMEA. We are pleased with the early results from the launch of the Beast Unleashed. We are continuing to expand distribution with the goal of being national by the end of the year. We are excited for the launch of Nasty Beast Hard Tea early next year with a goal of national distribution in the first half of 2024, as well as the additional alcohol opportunities that the CANarchy acquisition presents. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in a number of additional countries internationally. We are excited about the opportunities that the acquisition of the Bang Energy brand presents to us and believe that the brand will fit well within our broader portfolio of energy drink brands. I’d like to now open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] Our first question is from Peter Grom with UBS. Please go ahead. Peter Grom: Thanks, Operator. Good afternoon, guys. Hope you are doing well. So maybe one housekeeping question… Rodney Sacks: Good afternoon. Peter Grom: … and then one real question here. I guess, on just the Bang Transaction, I apologize if I missed this, but did you mention how much of a contribution the transaction was to sales in the quarter? And then, I guess, just my real question here is, I would love to get some more color on the quarter-to-date trends you just mentioned. I think it was 25% or so, much better than what we can see in the track data. So can you maybe unpack the drivers of that? Is that simply just much stronger growth in international markets or is there any sort of sales pull-forward or timing impacts that we need to take into consideration? Just any color there I think would be really helpful. Thanks. Rodney Sacks: Okay. Firstly, with regard to the Bang Transaction and the Bang sales numbers, we do not separately give those numbers. They are all included within the Monster Energy Drinks segment. We launched Bang Energy in September through the Coke bottling system and it was not an immediate launch on September 1, some bottlers took a little bit earlier in August and many that rolled out in September, rolled out through the month of September. So this is not a real fair quarter for the capability of what Bang can bring to the portfolio. And then, on your second point, it was very difficult to hear you, Peter. I think you are referring to the October sales, were you not? Peter Grom: Yeah. I was just trying to understand, I think you mentioned 25% or so, it’s just a lot different or stronger than what we can see in track data even after backing out kind of the Bang drag. So I just was trying to get some color in terms of what were the drivers of that, is it simply stronger growth outside the U.S. or is it -- is there any sort of timing contributions or pull-forward in sales, just any color you can provide I think would be really helpful. Rodney Sacks: Well, I think, it’s important to understand that we have large unmeasured channels. And when one looks at Nielsen or IRI numbers, one doesn’t really appreciate that the company operates through -- customers that do not participate in Nielsen or are not measured by Nielsen. And in addition a number of chain stores that allow pickup of products or ordering online, those numbers are not included within the all major channels that we see on the Nielsen. They included in the stores data, but they are not included in the all measured channels. Why? I really cannot answer that question. So there are a number of factors. The business was strong. We had a good October and those are the numbers. So, I really cannot comment anymore. Operator: The next question is from Andrea Teixeira with JPMorgan. Please go ahead. Drew Levine: Hey. Good afternoon. This is Drew Levine on for Andrea. Thank you for taking our question. So just wanted to circle back on the Bang acquisition and the transition to the Coke bottling system. Just any high level thoughts on improving distribution and sort of timeline to regaining shelf space for the brand would be helpful. And then, secondarily, within the Nielsen and IRI channels, it does appear that, sequentially, some of these more sort of emerging brands aren’t really gaining as much market share sequentially. So just any high level thoughts on the category dynamics if you think those emerging brands might be hitting on a sort of ceiling and Monster’s position within there, that would be helpful? Thank you. Rodney Sacks: Yeah. So, remember, that number of both convenience and chain and other large stores discontinued the Bang brand during a period where there was a litigation and also with the products were questionable as regards to labeling. So there was a lot of discontinuation of Bang throughout the system. What we are doing and what our Coke bottlers are doing is regaining the distribution that is out there for Bang and also we are as a company making presentations to the large and smaller retailers, both convenience, grocery, mass, and obviously, the club channel to ensure that Bang is restocked in their sets. So that will take a little bit of time, it doesn’t happen overnight and we are hopeful that we will be able to achieve really very much extended distribution in the new sets as they come out. And then on your second question regarding the smaller brands, already we have a mission that’s focused on our brands and our brand families, and I really don’t want to comment on the competition. Other than to say that we have a very comprehensive portfolio here and we believe that we are in a good position to focus and build upon our own sales, while recognizing the achievements of the competitors and the positioning of the competitors. Operator: The next question is from Vivien Azer with TD Cowen. Please go ahead. Vivien Azer: Hi. Good evening. Thank you. I wanted to follow up on your commentary, just now in terms of the conversations that you are having with retailers, recognizing that it might be a little bit early days in terms of driving for extended shelf reset and increased placement on Bang, but operationally, kind of how are you thinking about that? Is it kind of a one-for-one for every market share point of improvement you think you can drive for Bang that’s incremental square footage? Are you willing to sacrifice some linear square footage on tertiary, SKUs within your own portfolio to revitalize that brand, any incremental color would be helpful? Thank you. Rodney Sacks: Yeah. We have set our sales team an objective and that is they are not compromise any of our existing shelf space to incorporate the Bang brand. The Bang brand has emerged as a lifestyle brand and we believe it should be positioned in a -- hopefully in a separate cooler away from the energy beverages that includes the wellness beverages and the performance beverages and that’s the mission that we are focusing on with our sales teams. Operator: The next question is from Charlie Higgs with Redburn Atlantic. Please go ahead. Charlie Higgs: Hey, Hilton and Rodney. I hope you are both well fine. I got a question on China, please, and the good 28% growth you posted there. Just wondering if you could give any color on that number. It’s a lot stronger than competitors seem to be posting in China. And then, just how the portfolio shaping up there, and then, you -- have you launched Predator there? Thanks. Hilton Schlosberg: Perhaps, I will just take that. The brand, we have sort of looked at realigning the brand and focusing on the main SKUs and we are gaining additional sales and traction with the brands. So the brands, particularly, Green and Ultra, are doing very well in China and continuing to grow and getting solid sales per SKU -- per point of distribution. With regard to Predator, we are proceeding with our plans to launch Predator and that will happen towards the middle of next year, probably, the second quarter as presently planned. So that will go ahead in a PET bottle. So we are also pretty hopeful that we will have two offerings at different price points to attack the Chinese market. Thanks. Operator: The next question is from Mark Astrachan with Stifel. Please go ahead. Mark Astrachan: Yeah. Hey, guys. Good afternoon. Rodney Sacks: Hi. Mark Astrachan: Just one follow-up on one other question. So if you look at the scanner data, we look at total distribution points for Bang, I show it’s up something like 22% at current levels or kind of a week or two ago relative to where it was even in September. So you had mentioned helping that, I think, the rollout in September was a bit more measured. So I suppose why shouldn’t we get a little more excited about what you can do from shelf space in terms of where it was? I guess it’s never going to be what it was a few years ago, but certainly seems like it’s on a good starting level there. And then, the main question, we are getting lots of questions and I am sure you are about how to think about pricing and what Red Bull is going to do in the market. I guess, how long does it take for you to figure out how much pricing Red Bull is going to pass-through and how quickly or when you have to tell the retail establishments that you are planning on following them if you decide to do that? Thanks. Rodney Sacks: Well, generally when you have a price increase in our industry, it takes 60 days to 90 days to get pricing adjusted in the U.S. market. I think where we are is, we are evaluating the competition, and obviously, we are reevaluating Red Bull and their pricing and we will see where it goes. They took -- because of promotions they took a lot less in 2022 than was originally expected. So I think we just watching for what happens with demand and the elasticity of demand and we are in a really difficult consumer environment, not necessarily for energy drinks as you have heard on this call. But I think we have to be very wary and watch and see and we will evaluate what makes sense for us and time we will make a decision. I mean we have always said that if there is an opportunity to take price, we will, but we are also very cognizant of the fact that, we don’t want to lose a bunch of market share in the process. And then, Mark, you referred earlier to Bang, and yes, the Coke bottlers during the month of September got Bang back in as many shelves as they were authorized to get product back. And yes, of course, there was an increase in September, but -- and October, and we will continue seeing the development of Bang as we get more and more shelf space authorized to -- for the brand. But as always, we don’t give guidance on these calls and but I will just say that, we are all optimistic here about the future and the potential of the brand otherwise we wouldn’t have done the acquisition. Operator: The next question is from Michael Lavery with Piper Sandler. Please go ahead. Michael Lavery: Thank you. Good afternoon. Rodney Sacks: Hi. Just was wondering if you could give a sense of strategically how you think about the portfolio. In the US, you have got the share headwinds are greater for the Monster brand versus some others. Maybe just how do you think about resource allocation or trying to push to protect and strengthen that brand, what kind of margin mix implications are there or is it just anything under the total corporate umbrella is -- if it it’s got momentum is great. Just give us good a little sense of how you think about the portfolio, strategy and how much -- how important it is for Monster to take the lead or not? Rodney Sacks: I think Monster has always been our lead brand and will continue to be the lead brand. So, ultimately, we focus on Monster itself. And then, we look at the broader portfolio, we look at the category. The category has got grown in the last couple of years and it’s much, much broader than it was and so we think that Monster’s positioning should stay as it is, it’s got -- its positioning, it’s got its authenticity and credibility for what it stands for and it can’t be everything to all consumers. And that’s why these other brands play a really important role for the company and enable us to actually attack other parts of the category, other consumers who have different values and have different need states, whether it’s from NOS to Reign. You saw the results of Reign have increased and sales have really been very healthy. So that brand is doing very well with its positioning, which is different to the positioning we have got for Rainstorm. And then, the same thing that, as Hilton mentioned earlier, we have sort of -- we have taken the positioning of -- for Bang as sort of more of a lifestyle brand. Again, it has its own positioning. The cans, as you know, in the last few years has changed from being a black can, more performance orientated to be a white can, more lifestyle orientated. So there are different positionings, different price points, we think that we will get incremental space for these other brands in joining coolers or additional coolers space, where you are having the -- where you are finding more space being allocated to the clean energy or natural or sort of healthier perception energy brands. As you -- also look at sizes, Rainstorm is in a 12-ounce cans versus our traditional Reign brand in a 60-ounce black can. So these are ways that we are able to distinguish these different products and find a place for each of them on the shelf and to attract different consumers. And so, if you look at the whole portfolio, we think it actually fits together quite nicely and we see growth coming from all of these different levels, but still 100% our main brand remains and our focus is obviously Monster, which is the driver for the company and will continue to be so. Hilton Schlosberg: Rodney, I think, one other point for Michael is that, if -- Mike, you need to look at the numbers, because, I think, Red Bull is suffering far worse than Monster and the -- I think that’s something you need to look at. That’s number one. And number two, a number of our analysts are -- and we have noticed this as of late, are taking the Bang numbers and putting the Bang numbers into Monster, both this year and last year. And obviously, that’s not a great exercise, because Bang has -- Bang share and Bang sales have fallen off dramatically over the last year, particularly through all this litigation and with the removal from shelves and the discontinuations as I mentioned earlier. So that’s not a good exercise to put the Bang brand into Monster this year and last year. So what we did on this call, we actually separated Bang separately and the rest of the portfolio so one could get a feel of the performance of the Monster portfolio separately from what’s happening with Bang. Hopefully, sometime down the line we will be able to roll the two into one another and then it will make better sense of growth or otherwise. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Sacks for any closing remarks. Rodney Sacks: Thanks. On behalf of the company, 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 innovate, develop and differentiate our brands and to expand the company both at home and abroad. And in particular capitalizing on our relationship with the Coca-Cola bottler system. We believe that we are well-positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain safe and healthy. Thank you very much for your attendance. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

Operator: Good day, and welcome to the Monster Beverage Corporation Second Quarter 2023 Financial Results 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. Please note, today's event is being recorded. I'd like to turn the conference over to Mr. Rodney Sacks and Hilton Schlosberg, Co-CEOs of Monster Beverage. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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, 2023, and quarterly report on Form-Q including the sections contained therein entitled Risk Factors and Forward-Looking Statements, for a discussion on specific risk and uncertainties that may affect our performance. The company assumes no obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks : Thanks Tom. The company achieved record second quarter net sales of $1.85 billion in the 2023 second quarter, 12.1% higher than net sales of $1.66 billion in the 2022 comparable period, and 14.4% higher on a foreign currency adjusted basis. Gross profit as a percentage of net sales for the 2023 second quarter was 52.5% compared with 47.1% in the comparative 2022 second quarter. The increase in gross profit as a percentage of net sales for the 2023 second quarter as compared to the 2022 second quarter was primarily the result of pricing actions, decreased operating costs and increased aluminum can costs. The increase was partially offset by lower gross margins in the alcohol segment and in which our sales had quite a nice bump as you seen from the release. As expected, promotional allowances for the 2023 second quarter were marginally higher than the comparable 2022 second quarter, as well as 2023 first quarter. Operating expenses for the 2023 second quarter were $450.4 million, compared with $406.9 million in the 2022 second quarter, as a percentage of net sales operating expenses for the 2023 second quarter were 24.3% compared to 24.6% in the 2022 second quarter. Distribution expenses for the 2023 second quarter decreased to $82 million, or 4.4% of net sales compared to $87.9 million or 5.3% of net sales in the 2022 second quarter. The $5.8 million decrease in distribution expenses was primarily due to decreased freight out expenses of $11.8 million partially offset by higher warehouse expenses of $4.8 million as a result of higher raw materials and finished product inventories in the United States and EMEA. The increase in other operating expenses was primarily due to increased payroll expenses. We are purchasing aluminum cans from local sources globally. We have returned to our orbit strategy of producing in closer proximity to our customers. The costs of repositioning finished products to distribution centers are included in freight-in costs. The company continues to address certain challenges in its supply chain as it navigates the current global supply chain environment. Operating income for the 2023 second quarter increased 14.4% to $523.8 from $373 million in the 2022 comparative quarter. The effective tax rate for the 2023 second quarter was 23.2% compared with 25.3% in the 2022 second quarter, the decrease in the effective tax rate was primarily attributable to an increase in deductible interest expense, a decrease in the effective state income tax rate, as well as an increase in net income in certain foreign jurisdictions, which have lower tax rates compared to the United States. Net income increased 51.4% to $413.9 million, as compared to $273.4 million in the 2022 comparable quarter. Diluted earnings per share for the 2023 second quarter increased 52.8% to $0.39 from $0.26 in the second quarter of 2022. Due to continued cost pressures, the company implemented pricing actions in the United States in 2022, as well as in many other international markets in 2022, and in the first half of 2023. The company plans to implement additional price increases in a number of other international markets during the remainder of the 2023 year. In the United States, the company implemented an additional price increase on its 18.6 ounce and 24 ounce lines effective April 1, 2023. We will continue to review further opportunities for pricing actions in order to mitigate inflationary pressures. According to the Nielsen reports, for the 13 weeks through July 22, 2023 for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including Energy Shots increased by 13.6% versus the same period a year ago. Sales of the company's energy brands, including Reign were up 12.2% in the 13 week period, sales of Monster were up 10.5%, Sales of Reign were up 43.7%, sales of NOS increased 11.2% and sales a Full Throttle increased 14.7%. Sale of Red Bull increased 10.2%. The company continues to have market leaders share leadership in the energy drink category for all outlets combined in the United States in both the 13 week and four week periods ended July 22, 2023. According to Nielsen for the four weeks ended July 22, 2023, sales in dollars in the energy drink category in the convenience and gas channel, including Energy Shots in dollars increased 13.7% over the same period, the previous year. Sales of the company energy brands which include Reign increased 13.8% in the four week period in the convenience and gas channel, sales of Monster increased by 11.1%over the same period versus the previous year. Reign sales increased 54.9%, NOS was up 13.2%, Full Throttle was up 23.2% sales of Red Bull were up 8.8%. According to Nielsen for the four weeks ended July 22, 2023, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars increase from 36% to 36.1%. Monster share decreased from 30.4% a year ago to 29.8%, Reign sharing increased to 0.8 of share point to 3.1%, NOS’s share remain at 2.5% and Full Throttle share remained at 0.7%. Red Bull’s share decreased 1.6 points from 36.3% a year ago to 34.7%, VPX Bang’s share decreased 4.2 points to 1.8%. Five Hour share was lower by 0.7 point at 3.5%. Rockstar share was down 0.2 over point to 3.4%, Celsius’ share is 6.6%, C Four’s share is 3% and Ghosts share is 2.8%. Please note that VPX Bank was in bankruptcy during this period, and we will address our acquisition of Bang later in this call. According to Nielsen for the four weeks ended July 22 2023, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel decreased 3% over the same period the previous year. Sales of Java Monster including Java Monster 300 and Java Monster Nitro Cold Brew was 3.3% higher in the same period versus the previous year. Sales of Starbucks Energy was 7% lower, Java Monster share of the coffee plus energy drink category for the four weeks ended July 22, 2023 was 54.1%, up 3.3 points, while Starbucks Energy's share was 45.6% down two points. According to Nielsen in all major channels in Canada for the 12 weeks ended June 17, 2023, the energy drink category increased 14.8% in dollars. Sales of the company's energy drink brands increased 21.6% versus a year ago. The market share of the company's energy drink brands was 42.4%, up 2.4 points, Monster sales increased 25.6% and its market sharing increased 3.3 points to 38.1% NOS’s sales decreased to 5.8% and its market share decreased 0.3 over point to 1.3%. Full Throttle sales decreased 43.2% and its market share decrease 0.3 over point to 0.3%. According to Nielsen for all outlets combined in Mexico, the energy drink category increased 23.7% for the month of June 2023. Monster sales increased 25.3%. Monster’s market sharing value increased 0.4 points to 28.8% against the comparable period the previous year. Sales of Predator increased 75.3% and its market sharing increased 1.7 points to 5.6%. The Nielsen's statistics from Mexico cover single months, which is a short period that may often be materially influenced positively and or negatively by sales in the OXA convenience chain, which dominates the market sales in the OXA convenience chain in turn, can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen for the month of June 2023 compared to June 2022, Monster’s retail market sharing value increased in Argentina from 50.5% to 55.5%, in Chile from 38.1% to 40.8%. And in Brazil from 41.6% to 44.4%. Monster Energy is the leading energy brand in value in Argentina, Brazil and Chile. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide. Because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen in a 13 week period until June 18, 2023. Monster’s retail market sharing value as compared to the same period the previous year grew from 16.2% to 16.6% in Belgium, from 32.7% 33.1% in France, from 29.8% to 31.1%, in Great Britain, from 31.8% to 35.2% in Norway, from 28.1% to 30.3% in the Republic of Ireland, from 39.4% to 41.6% in Spain, and from 15.6% to 15.9% in Sweden. Monster’s retail market sharing value as compared to the same period the previous year declined from 6.6% to 5.5% in the Netherlands, according to Nielsen in the 13 week period ended until the end of June 2023, Monster’s retail market sharing values as compared to the same period the previous year declined from 19.3% to 17.7% in South Africa. According to Nielsen as 13 week period until the end of May 2023, Monster’s retail market value as compared to the same period the previous year grew from 18% to 22.1% in the Czech Republic, from 27.4% to 28%, in Denmark, from 15% to 16.4% in Germany, and from 28% to 29.9% in Italy. Monster’s retail market sharing value as compared to the same period the previous year, declined from 38.7% to 37.5% in Greece, and from 20.6% to 18.7% in Poland. According to Nielsen in the 13 week period until the end of May 2023, Predator’s retail market sharing value as compared to the same period the previous year grew from 26.3% to 31.5% in Kenya, and from 15.4% to 19.8% in Nigeria. According to IRI in Australia, Monster’s market sharing value for the four weeks ending July 9, 2023, increased from 14.1% to 16.9% as compared to the same period the previous year. Mother's market sharing value decreased from 10.4% to 10.3%. According to IRI in New Zealand, Monster’s market sharing value for the four weeks ended July 9, 2023 increased from 12.6% to 14.9% compared to the same period of the previous year. Live Plus’s market sharing value decreased from 6.5% to 5.6%, and Mother's market sharing value remained at 5.3%. According to INTAGE in Japan in the month ending June 2023 Monster’s market sharing value in the convenience store channel, as compared to the same period the previous year declined from 56.7% to 55.1%. According to Nielsen in South Korea, in the month ending June 2023, Monster’s market sharing value in all outlets combined, as compared to the same period the previous year decreased from 59.9% to 57.6%. We again point out that certain market statistics that cover single months or four week periods may often be materially influenced positively and or negatively by promotions or other trading factors during these periods. Net sales to customers outside the US was $715.4 million, 38.6% of total net sales in the 2023 second quarter compared to $649 million, or 39.2% of total net sales in the corresponding quarter in 2022. Foreign currency exchange rates had a negative impact on net sales in the US and US dollars by approximately $38.4 million in the 2023 second quarter. Included in reported geographic sales, our sales to the company's military customers, which are delivered in the US and transshipped to the military and their customers overseas. In EMEA, net sales in the 2023 second quarter, increased 13% in dollars, and increased 16.4% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales for the second quarter was 34% compared to 26.7% in the same quarter in 2022. We are pleased that in the 2023 second quarter Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Italy, Norway, the Republic of Ireland, Spain and Sweden. In Asia Pacific, net sales in the 2023 second quarter increased 17.8% in dollars and increased 26.7% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales was 42.4% versus 40.4% over the same period in 2022. Net sales in Japan in the 2023 second quarter increased 11.9% in dollars and increased 21.2% in local currency. In South Korea, net sales increased 50.3% in dollars and increased 59.5% in local currency as compared to the same quarter in 2022. Monster remains the market leader in Japan and South Korea. In China, net sales in the second quarter increased 3.7% in dollars and increased 10.6% in local currency as compared to the same quarter in 2022. We remain optimistic about the prospects for the Monster brand in China. In the 2022 second quarter, our distribution partners restocked inventories following the easing of the COVID-19 restrictions in China. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 26% in dollars and 36.4% in local currencies. In Latin America, including Mexico and the Caribbean, net sales in the 2023 second quarter increased 0.1 of a percent in dollars, and increased 9.4% in local currencies over the same period in 2022. In Brazil, net sales in the 2023 second quarter increased by 2.5% in dollars, and 3.6% in local currency. Net sales in Mexico increased 23.3% in dollars, and 10.1% in local currency in the 2023 second quarter. Net sales in Chile decreased 23.8% in dollars, and decreased 26.6% in local currency in the 2023 second quarter. The decrease in sales in Chile were due in part to a normalization of bottler inventory levels. Net sales in Argentina decreased 19.5% in dollars, but increased 54% in local currency in the 2023 second quarter. We will now provide an update on our litigation with Vital Pharmaceuticals Inc. which will be referred to as VPX, the former maker of Bang Energy drinks. We previously discussed the trademark infringement arbitration in which an arbitrator found against VPX and awarded Monster Energy Company or MEC and Orange Bank, $175 million in damages, attorneys fees and costs and an ongoing 5% royalty on future sales of certain Bang Energy. VPX has appealed the judgment. We also previously discussed the false advertising case in the United States District Court for the Central District of California, in which the jury returned a verdict awarding MEC approximately $293 million in damages. And the District Court granted MEC’s motion for a permanent injunction in joining VPX and former CEO Jack Owoc from falsely or deceptively claiming that Bang any other beverages contained creatine or form of creatine, VPX and Jack Owoc appealed the injunction. The bodies have completed briefing on remaining post round issues On October 10, 2022 VPX, along with certain of its domestic subsidiaries, and affiliates filed for protection under Chapter 11 of the bankruptcy code in the United States District Court for the Southern District of Florida. On June 28, 2023, VPX and certain affiliates entered into an asset purchase agreement with the company, which among other things provided for the company's acquisition of substantially all of the VPX's assets. The transactions contemplated by the asset purchase agreement closed on July 31, 2023, at which time the company was deemed to have allowed general unsecured claims in VPX's bankruptcy case relating to the arbitration award, and the jury's award, subject to the potential modification of the Jury Award in the light of pending post-verdict motions filed by MEC and VPX. The asset purchase agreement also includes a mutual release between VPX and MEC which among other things, requires VPX to dismiss its appeals of the trademark infringement arbitration and the false advertising case, as well as cases that VPX filed against MEC in the United States District Court for the Southern District of Florida. This mutual release does not include any claims the company might have against Mr. Owoc in relation to their jury award. The company will not recognize the allowed general unsecured claims or the jury award as it relates to Mr. Owoc [inaudible] realized or realizable. We will not be answering questions on these legal proceedings on today's call. In June 2023, the company also entered into an agreement with Orange Bank Inc. regarding the company's use and registration of certain bank trademarks and trade names subject to the successful closure of the asset purchase agreement. Under this agreement, the company will pay Orange Bank Inc. a onetime payment of approximately $12.5 million and a 2.5% royalty on all future sales of products bearing the trade name Bang. On June 31, 2023, we completed our acquisition of substantially all of the assets of Vital Pharmaceuticals Inc. Sorry, apologize on July 31 2023, we completed its acquisition of substantially all of the assets of Vital Pharmaceuticals, Inc. and certain of its affiliates, collectively Bang Energy for a purchase price of approximately $362 million, subject to adjustments. The acquired assets include Bang Energy beverages, and a beverage production facility in Phoenix, Arizona. We successfully recruited a limited number of former VPX employees to fill certain open positions within Monster, as well as the majority of the team at the manufacturing site in Phoenix. Pursuant to Monster's obligations with the Coca Cola Company, Bang Energy will be distributed through the Coca Cola bottlers network, starting with the United States in the 2023 third quarter. As a result, there will be a temporary disruption of the product supply of Bang Energy brand energy drinks. Additionally, our intention is to rationalize Bang’s product offerings and product lines and to fully integrate Bang into the Monster infrastructure. We do not intend to manufacture or sell Bang’s other product lines such as Red Line or Shots beyond liquidating existing inventories at this time, we may consider reintroducing certain of those product lines sometime in the future. We are excited about our acquisition of the state of the art Bang Energy production facility in Phoenix, Arizona, which we intend to utilize for Bang as well as other products in the Monster portfolio. As we only completed the acquisition this week, it is still early days and we will provide you with further updates on Bang Energy on our next Investor Call in November. In the first half of 2023, we launched The Beast Unleashed which is now available in 28 states through a network of beer distributors. We are pleased with the early results and are continuing to expand distribution, with the goal of being national by the end of the year. According to Nielsen scan data, The Beast Unleashed is currently one of the top new brands in the beer category in 2023. We plan to launch a hot iced tea extension of The Beast Unleashed named Nasty Beast Hardcore Tea later this year or early next year, with a goal of national distribution in the first half of 2024. The brand will have full flavors Original, Half & Half, Razzleberry and Green. Nasty Beast Hardcore Tea will be available in 24 oz. single-serve cans as well as in a variety 12-pack in 12 ounce sleek cans. We refreshed the dials and doubled dials beer brands in the first half of 2023 and introduced Dale's American Light Lager as part of the refresh. The brand family has performed well since the refresh. The high Lybrand family the largest in our beer portfolio, from scarcity is also performing well despite overall headwinds in the craft segment and is showing growth in retail scans. Our Alcohol Beverage innovation pipeline is robust, and we look forward to sharing use of additional new products in the future. In the 2023 second quarter in the United States, we focused on gaining distribution on our first quarter product innovation. Following the success of our recent Monster Energy Zero- Sugar launch, we are planning to launch NOS Zero-Sugar in 16 ounce cans in the 2023 fourth quarter. In the 2023 second quarter, we expanded our Java Monster portfolio in Canada with the launch of Java Monster 300 Triple Shot, Mocha and Vanilla. We launched several new products in Latin America in the 2023 second quarter. In Argentina, we introduced our Monster Reserve brand, with the launch of Reserve White Pineapple in June. In the Caribbean, we continue to expand our portfolio and introduced a number of new products in different countries. After we successfully launched Java Monster Super Coffee, Mean Bean and Loca Mocha in Australia earlier this year, we expanded the launch of such products to the New Zealand market in the 2023 second quarter. We are pleased with early results in both markets. In EMEA, in the second quarter of 202,3 we launched Monster Reserve Watermelon and White Pineapple, Ultra Gold, Ultra Fiesta Mango, Ultra Paradise, Ultra Rosa, Ultra Watermelon, Used Ozzy Lemonade and Used Chaotic in a number of countries. During the 2023 second quarter, we also launched additional SK use or BPM, Burn, Nalu, Predator and Reign in certain countries. We launched the Monster Energy brand in Egypt in June 2023. To add to Predator which we launched earlier this year in Egypt. In EMEA, as part of an ongoing pan EMEA launch, we expanded the distribution of our Monster Energy Lewis Hamilton 44 Zero-Sugar Energy drink to an additional eight EMEA markets in the second quarter of 2023 for a total of 35 markets to date. During the second quarter of 2023, we launched Monster Reserve Watermelon in Japan and Monster Ultra Sunrise in Korea and Monster Reserve Pineapple in Turkey. We launched Predator in additional regions in India. We are planning to introduce the Predator brand in additional countries in APAC in the course of 2023. In July 2023, we launched Monster Ultra Peachy Keen in Japan and Predator in Iraq. Monster Energy will be launched in the Philippines later this year. We estimate that on a foreign currency adjusted basis, including the alcohol brands segment, July 2023 sales were approximately 13.7% higher than the comparable July 2022 sales and 12% higher than July ‘22 excluding the alcohol brand segment. We estimate July 2023 sales, including the alcohol brand segment to be approximately 12.1% higher than in July 2022 and 11.2% higher than in July 2022, excluding the alcohol brand segment. July 2023 had the same number of selling days as July 2022. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors, such as, for example, selling days, days of the week in which holidays fall, timing of new product launches, and the timing of price increases, and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. First, the energy category continues to grow globally. Second, we are pleased to report that our pricing actions which have been implemented to partially mitigate inflationary pressures have not significantly impacted consumer demand. Third, our IFF labor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower land of costs to our EMEA region. Fourth, we are enthusiastic for 2023 new product innovations, notably Monster Energy Zero-Sugar, Ultra Strawberry Dreams, Rainstorm and Tour Water in United States and Monster Energy Lewis Hamilton 44 Zero-Sugar in EMEA. Fifth, we are pleased with the early results from the launch of The Beast Unleashed, we are continuing to expand distribution with the goal of being national by the end of the year. Sixth, we are excited about the launch of Nasty Beast Hardcore Tea later this year or early next year, with the goal of national distribution in the first half of 2024 as well as the additional alcohol opportunities that the CANarchy acquisition presents. Seven, we are pleased with the initial results of our launch Rainstorm, our new line of Total Wellness Energy drinks. Eight, we are pleased with the rollout of Prince and Fury, our affordable energy drink portfolio internationally, we are proceeding with plans to launch our affordable energy brands in a number -- additional number of international markets. Nine, we are excited about the opportunities that the acquisition of the Bang Energy brand presents to us and believe that the brand will fit well within our broader portfolio of energy drink brands. I would like to now open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] Our first question comes from Peter Grom at UBS. Peter Grom: Thanks, operator and good afternoon, guys. Hope you're doing well. So I wanted to pick up on the gross margin commentary and just get a sense for how the quarter kind of came in versus your expectations. This is the first time we haven't really seen the sequential improvement on gross margin in about a year. And I know you mentioned promotion, I think you've talked about other costs, back at the shareholder meeting. But can you maybe just talk about how you see the drivers of gross margin evolving through the balance of the year, should we still expect to see sequential progression from here? And then maybe bigger picture, can you help frame where we are on the long term margin recovery journey. Thanks. Hilton Schlosberg: Peter, the difficult answers your question is that we really don't give guidance. So if we look at this quarter that we just reporting, we spoke about some of the drivers behind the improvement in gross margin. But against that, we did have continued increases, and I've said this in previous quarters in certain ingredients and other input costs, as well as co-packing. So that's the fact that will stay with us. And then we have another obviously, issue that we spoke about, and that is geographical sales mix. So as we sell more product overseas, so the margin reduces overall, the percentage gross margin reduces overall. And then, as you look at the alcohol business building, the gross margins from that side of the business are less than the gross margins that we enjoy in the energy drink sector. So you've got pluses and minuses, the alcohol brands, you'll see in the Q that will be released in a day or so that the alcohol brands were $60 million of sales, and that margin is lower, and we've reported it as being lower than in the rest of the business. So, overall, there's really is a mix, and then with a Bang product coming in, we expect that the Bang product will have the same margins as the kind of Ultra products in our own portfolio, the Reign products and Ultra products, and that will improve margins. So overall, there's a -- we've got a mix of positive items that are benefiting gross margins and those items that are detracting from gross margins. Operator: Our next question comes from Andrea Teixeira with JPMorgan. Andrea Teixeira: Thank you, and good afternoon. Can you comment on where you're seeing the energy category demand perspective, from a consumer standpoint? And then related to that, obviously, congrats on the acquisition of Bang. How are you planning to lean even more into this wellness energy category, with the organic growth through the House Renovation, Rainstorm, in particular continues to grow fast, but now Bang adds more presence into that sub segment. So what are you – what you can share at this point, I know you're going to share more in the next earnings call. But can you talk about how you can participate even more in that category? And if I can squeeze just a clarification about Brazil and Latin America, I think x, Mexico continues to do well. But I was surprised to see a deceleration. I know, it's tough comparison, when you gain a lot of shares in Brazil, but just to make sure that we get those points in. Thank you. Hilton Schlosberg: So if I talk about the energy category as such, and we started looking at the one week data because the community looks at the one week data, and the energy category is still growing in good double digits 13% in the last week, so we're seeing a good increase in the energy category. And as we look at, traditional energy and wellness energy and performance energy, obviously, you've seen kind of differences within those segments. Interesting, the Bang started off life as a very much performance energy. And today, if you look at the brand, and you analyze what it stands for, really stands for a different segment, which is really lost on energy. So you've got all these different brands that are filling different needs within the energy space. But traditionally, energy is still growing, I did a quick analysis and the traditional energy is still growing and the number I'm looking at is around 10%. You've got this other wellness energy and obviously we are participating in that segment with Rainstorm, yes, which we are really excited about. And then performance energy where we have Reign which is doing very well. The difficulty in, really going deep in -- deep dive into performance energy is that the Bang brand has suffered, because it's lost so much distribution. And that's a factor that obviously is driving that segment of the market. And then quickly, just turning to Brazil, and Chile, the energy category in those countries really grew very rapidly. And we grew extensively within those two countries, but there has been, we've seen a little bit of a slowdown in growth in both Brazil and in Chile. And as you can see, from the numbers that we reported, we are still market leaders. So it's something that is part of doing business within Brazil and in Chile, and we maintaining a market share. And we had a product issue in Chile, which have now been sorted, we bring in product from Mexico, we now are able to produce locally in Chile. But the market has taken somewhat of slowing growth. And, we've been as a market leader, we've been part of that as well. Operator: The next question comes from Filippo Falorni with Citi. Filippo Falorni: Hey, good afternoon, everyone. Two clarifications on the Bang acquisition. So first, can you provide us with like, the last 12 months sales for the brand? And then bigger picture like how are you guys planning to position the brand in the US? What consumers are you going after? And then internationally, you mentioned the transition to the coke system in the US, you plan that also to transition international? And if you can give us any timeline on that. Thank you. Hilton Schlosberg: Maybe I just comment a little bit just, pretty much Hilton, I think covered most of in his last answer. But we are able to look at the brands if you've seen what how the Bank brand has, in fact developed. It was originally in the black can focused, sort of focus on competing with Monster and it then went to a color can and then more recently it went to a white can. And then that white cat has gone through a transition as well. So you then got Reign which is in a black can, and you've got Rainstorm, which is in a 12 ounce white can. And so we see a different way of separating the brands, marketing them differently, and positioning and we think they can all basically fit within our broader portfolio completely separate to NOS which is very much a Motors sort of brand Full Throttle and Monster. So if you look at that packaging, that's how we do it, we're going to probably change the packaging slightly of the Bang brand, but it will remain principally a white can and in a 16 ounce. And so we feel that there is a way which we do -- all these brands can play quite with each other within our portfolio. Operator: The next question comes from Peter Galbo with Bank of America. Peter Galbo: Hey, guys, good afternoon. Thanks for taking the question. I guess if I can just to follow back up on Peter Grom’s question and understanding you don’t give guidance around gross margin. I guess as we looked at it on a gross profit per case basis. You were actually kind of flattish sequentially. So ignoring the percentage but looking at the dollars, is that at all a better way to think about the go forward as just as you're managing gross profit per case on dollar basis relative to the margin. Thanks very much. Hilton Schlosberg: So we always look at gross profit per case. When we launch a product that's very much part of the way that this company has always examined new product introductions. So know your costs that phrase has been something that we preached for any number of years. So as we go forward with new products with new innovation, even for example, with a Bang acquisition, knowing the cost is vital to really being able to position a product within our portfolio. Now, obviously, some products have lower gross profits per case, like, for example, the coffee products, but they are an important part of our portfolio. So as we examine products, and we examine where we are, we always have to look at what we are delivering to consumers to meet to their needs, within the overall ambit of a product portfolio. Now, when we went into energy, into alcohol, I'm sorry, we went into alcohol with our eyes wide open, we knew the margins that were in alcohol would be lower than the margins in the energy drink category. So we look at margin, I've always said this on calls, I say we bank dollars, we don't bank percentages. And I've always encouraged analysts to just think, likewise, that we don't bank percentages, we bank dollars. Operator: The next question comes from Chris Carey with Wells Fargo Securities. Chris Carey: Hey, good afternoon. How you doing? So just one quick follow up there. And then just kind of like a capital allocation question. But would you mind providing the Latin America gross margin on the quarter? I probably missed it or I'm not sure you gave it. But that would be helpful, and just a Latin America in general. So is there a temporary disruption that we're working through? Or is what we're seeing underlying demand? So just those two follow ups? And then I realized this is a multi-part question, I'm probably going to get in trouble. But just from a capital allocation standpoint, when can you start buying back stock again, so thanks so much. Hilton Schlosberg: So let's talk a little bit about Latin America, remember, we sell to the distributors, and the distributors sell to the retailers. And as the demand is somewhat reduced at retail, the distributors cut back their inventory. So they over inventorize, they cut back. And, unfortunately, we are the recipient of what happens in the distribution channel. So as I said, all of these issues will resolve themselves, because you have these cutbacks, but then we go to a more orderly situation, where we should go to more lean situation in future quarters. And that's where we are in Latin America. The brand is so as I said, very strong. We market leaders in Argentina, we market leaders in Brazil, we market leaders in Chile as very big markets and market leaders in other countries as well. So that's an answer to that. And then, what I would ask you to do is, listen to the conference call, because I don't want to repeat numbers that we've already said, we're already running out of time, the Q will be out in in two days, and that should answer your questions on Latin America. Operator: Our next question comes from Bonnie Herzog with Goldman Sachs. Bonnie Herzog: All right. Thank you. Hi, guys. I just wanted to quickly circle back on gross margins and see if you could share what impacted out of orbit issue that you highlighted during your shareholder meeting, maybe head off margin and whether this issue is now resolved, essentially. And I just want to confirm that you guys are now back working within your orbit. Hilton Schlosberg: Yes, Bonnie, there always will be anomalies. And we're in the middle of summer, as you know, and it's been pretty hot out there. And we're doing our very best to stay within orbits, but there are anomalies from time to time and our mission in this company has always been to satisfy our customers. So yes, there will be, we maintaining within our orbits, but there are times when we will and we do stray from that. This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Rodney Sacks for any closing remarks. Rodney Sacks: Thanks very much. On behalf of the company, I'd like to thank everyone for their continued interest. 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 capitalizing on our relationship with the Coca Cola Bottler system. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you will remain safe and healthy and have enjoyable summer. Thank you very much for your attendance. Operator: The conference is now concluded. Thank you for attending today's presentation. You may all now disconnect.

Operator: Good afternoon, and welcome to the Monster Beverage Corporation First Quarter 2023 Financial Results 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. Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Mr. Rodney Sacks and Hilton Schlosberg, Co-CEOs of Monster Beverage. Please go ahead. Rodney Sacks: Thank you very much. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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, 2023, including the sections contained therein entitled Risk Factors and Forward-Looking Statements, for a discussion on specific risk and uncertainties that may affect our performance. The company assumes no obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company achieved record first quarter net sales of 1.7 billion in the 2023 first quarter, 11.9% higher than net sales of 1.52 billion in the 2022 comparable period, and 15.3% higher on a foreign currency adjusted basis. Gross profit as a percentage of net sales for the 2023 first quarter was 52.8% compared with 51.1% in the comparative 2022 first quarter. The increase in gross profit as a percentage of net sales for the 2023 first quarter as compared to the 2022 first quarter was primarily the result of pricing actions, decreased freight in costs, and decreased aluminum can costs. Gross profit as a percentage of net sales increased on a sequential quarterly basis to 52.8% in the 2023 first quarter, from 51.8% in the 2022 fourth quarter, and 51.3% in the 2022 third quarter. Gross profit as a percentage of net sales, excluding gross profit for the company's alcohol brands segment increased on a sequential quarterly basis to 53.6% in the 2023 first quarter, from 52.5% in the 2022 fourth quarter, and 51.9% in the 2022 third quarter. The depletion of our remaining higher cost imported can inventories will continue over the next few quarters but should be fully utilized during 2023. Operating expenses for the 2023 first quarter were 412.8 million, compared to 377.2 million in the 2022 first quarter. As a percentage of net sales, operating expenses for the 2023 first quarter, were 24.3% compared with 24.8% in the 2022 first quarter. Distribution expenses for the 2023 first quarter decreased to 76.3 million or 4.5% of net sales, compared to 81.4 million or 5.4% of net sales in the 2022 first quarter. The 5.1 million decrease in distribution expenses was primarily due to decreased freight out expenses of 15.7 million partially offset by higher warehouse expenses of 9.9 million as a result of higher raw materials and finished product inventories in the United States and EMEA. The increase in other operating expenses was primarily due to increased payroll expenses. We're now purchasing aluminum cans from local sources globally. We have rebuilt finished product inventory levels globally to return to our Orbitz strategy of producing in closer proximity to our customers. The cost of repositioning finished products to distribution centers are included in freight-in costs. The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. Operating income for the 2023 first quarter increased 21.4% to 485.1 million from 399.5 million in the 2022 comparative quarter. The effective tax rate for the 2023 first quarter was 20.1% compared with 25% in the 2022 first quarter. The decrease in the effective tax rate was primarily attributable to the increase in the stock compensation deduction in the 2023 first quarter. Net income increased 35.1% to 397.4 million as compared to 294.2 million in the 2022 comparable quarter. Diluted earnings per share for the 2023 first quarter increased 36.6% to $0.38 from $0.27 in the first quarter of 2022. Due to continued cost pressures, the company implemented pricing actions in the United States in 2022, as well as in many other international markets in 2022, and in the first quarter of 2023. The company plans to implement additional price increases in a number of other international markets during the remainder of the 2023 year. In the United States, the company implemented an additional price increase on its 18.6 ounce and 24-ounce lines, effective April 1, 2023. We will continue to review further opportunities for pricing actions in order to mitigate inflationary pressures. According to the Nielsen report, for the 13 weeks through April 22, 2023 all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including Energy Shots increased by 12.7% versus the same period a year ago. It's also the company's energy brands including Reign were up 10.5% in the 13-week period, sales of monster were up 9.5%, sales of Reign were up 24.1%, sales of NOS increased 14.1% and sales of Full Throttle increased 5.5%. Sales of Red Bull increased 10.6%, sales of Rockstar increased by 3.7%, and sales of 5-Hour decreased 4.1%. VPX Bang sales decreased 55.5%. The company continues to have market share leadership in the energy drink category all outlets combined in the United States in both a 13 week and 4-week periods ended April 22, 2023. According to Nielsen for the four weeks ended April 22, 2023, sales in dollars in the energy drink category in the convenience and gas channel, including energy shops in dollars increased 12.7%, over the same period of previous year. Sales of the company's energy brands, which include Reign, increased 11% in the four-week period in the convenience and gas channel. Sales of Monster increased by 9.3% over the same period versus the previous year. Reign sales increased 37.8%, NOS was up 8.8% and Full Throttle was up 11.7%. Sales of Red Bull were up 9.8%, Rockstar was up 5.4% and 5-Hourwas down 5.8%. VPX Bang sales decreased 59.5%. According to Nielsen for the four weeks ended April 22, 2023, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased from 37.5% to 36.9%. Once the share decreased from 31.6% a year ago to 30.6%, Reign share increased a half a share point to 2.9%, NOS share remained at 2.6 and Full Throttle share remind 0.7 of a percent. Red Bull share decreased 0.9 points from 35.2% a year ago to 34.3%. The VPX Bang share decreased 4.2 points to 2.4%, 5-Hour share was lower by [5.7] [ph] points, -- at 3.7%, Rockstar share was down point to 2 of a point to 3.4% CELSIUS share is 5.4%, C4 share is 2.8% and Ghost share is 2.9%. According to Nielsen for the four weeks ended April 22, 2023 sales in dollars of the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased 0.8 of a percent over the same period the previous year. To other Java Monster including Java Monster 300 and Java Monster Nitro Cold Brew was 0.6% higher the same period versus the previous year. Sales of Starbucks energy were 4.7% higher. Java Monster share of the coffee plus energy drink category for the four weeks ended April 22, 2023 was 55.1% down point one of a point while Starbucks energy share was 44.5% at 1.6 points. According to Nielsen, in all major channels in Canada for the 12 weeks ended March 25, 2023, the energy drink category increased 14.7% in dollars. Sales of the company's energy drink brands increased 19.5% versus a year ago. The market share of the company's energy drink brand was 43.1% up 1.7 points. Monster’s sales increased 19.7% and its marketing increased 1.6 points to 38.6. NOS sales increased 4.2% and its market share decreased by point one of a point to 1.3%. Full Throttle sales decreased 8.4% and its market share decreased point one of a point to 0.4%. According to Nielsen for all outlets combined in Mexico, the energy drink category increased 17.8% for the month of March 2023. Monster’s sales increased 24.8%. Monsters’ market share in value increased 1.7 points to 30% against the comparable period the previous year. Sales of Predator increased 71.3% and its market share increased 1.7 share points to 5.4%. The Nielsen statistics from Mexico cover single month, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain which dominates the market. Sales in the OXXO convenience chain in turn, can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen for the month of March 2023 compared to March 2022, Monster's retail market sharing value increased in Argentina to 53.5% and in Chile from 36.4% to 42.7%. In Brazil for the month end March 2023, our share increased from 42.1% to 43.9%. Monster Energy is the leading energy brand in value in Argentina, Brazil and Chile. I'd like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen, in the 13th week period until the end of March 2023, once this retail market share in value is compared to the same period the previous year, grew from 14.8% to 15.8% in Belgium, from 18.3% to 20.9%, in the Czech Republic, from 32.4% to 33.4%, in France, from 15% to 16.6% in Germany, from 29.3% to 30.9%, in Great Britain, or 28.2% to 30.4% Italy, from 29.7% to 34.6% in Norway, from 27.9% to 28.7% in the Republic of Ireland, from 38.2% to 39.9% in Spain, and from 15.9% or 18.1% in Sweden. Monster's retail market sharing value as compared to the same period the previous year declined from 7.8% to 4.7% in the Netherlands, from 21.2% to 19.2% in Poland, and from 20.1% to 19% in South Africa, According to Nielsen in a 13-week period until the end of February 2023, Monster's retail market share in value as compared to the same period the previous year increased from 27% to 27.7% in Denmark, once these retail market share in value as compared to the same period the previous year, declined from 38.3% to 36.5% in Greece. According to Nielsen in the 13-week period until the end of February 2023, [indiscernible] retail market share in value as compared to the same period the previous year grew from 23% to 31% in Kenya, and from 14.7% to 19.5% in Nigeria. According to IRI in Australia, Monster's market share in value for the four weeks ending April 9, 2023, increased from 13.5% to 16.6%, as compared to the same period the previous year. Mother's market share in value increased from 10.3% to 10.7%. According to IRI in New Zealand, Monster's market share in value for the four weeks ended April 16, 2023, increased from 12.9% to 14.6% compared to the same period the previous year. Live+'s market share in value increased from 6.1% to 6.2% and Mother's market share in value decreased from 5.7% to 5.1%. According to INTAGE in Japan, in the month ending March 2023, Monster's market share in value in the convenience store channel is compared to the same period the previous year grew from 52.5% to 52.7%. According to Nielsen in South Korea, in the month of ending March 2023, Monster's market share in value in all outlets combined, as compared to the same period the previous year, decreased from 59.4% to 56.8%. We again point out months, certain market statistics that cover single months or four-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. was $622.9 million, 36.7% of total net sales in the 2023 first quarter, compared to 553.4 million or 36.4% of total net sales in the corresponding quarter in 2022. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars, by approximately $52 million in the 2023 first quarter, included in reported geographic sales, or our sales to the company's military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2023 first quarter, increased 5.7% in dollars, and increased 14.8% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales for the first quarter was 30.7% compared to 29.6% in the same quarter in 2022. We are also pleased that in the 2023 first quarter, Monster gained market share in Belgium, Czech Republic, Denmark, France, Germany, Great Britain, Italy, Norway, Republic of Ireland, Spain and Sweden. In Asia Pacific, net sales in the 2023 first quarter increased 11.6% in dollars and increased 22.8% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales was 44.4% versus 40.9% over the same period in 2022. Net sales in Japan in the 2023 first quarter decreased 12% in dollars but increased 1.8% in local currency. In South Korea, net sales increased 4.3% in dollars, and increased 11.4% in local currency as compared to the same quarter in 2022. Monster remains the market leader in Japan and South Korea. In China, net sales in the first quarter increased 68.3% in dollars and increased 81.7% in local currency as compared to the same quarter in 2022. We remain optimistic about the prospects for the Monster brand in China. In Oceania which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam. Net sales increased 46.9% in dollars and 53.8% in local currencies. In Latin America, including Mexico and the Caribbean, net sales in 2023 first quarter increased 30.8% in dollars and increased 40.4% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales was 33% for the 2023 first quarter versus 35.4% in the 2022 first quarter. We note that gross profit in the region was adversely affected by a fire at a warehouse in Chile. We are implementing measures to improve gross profit in this region. The spots that challenges in Chile, and continuing challenges with importing raw materials in Argentina. In Brazil, net sales in 2023 first quarter increased by 28.5% in dollars, and 22.5% in local currency. Net sales in Mexico increased 31.9% in dollars, and 21.4% in local currency in 2023 first quarter. Net sales in Chile increased 36.3% in dollars and increased 36% in local currency in the 2023 first quarter, net sales in Argentina increased 13% in dollars, and increased 98.8% in local currency in the 2023 first quarter. We will now provide an update on our litigation with Vital Pharmaceuticals, which will be referred to as VPX, the maker of Bang energy drinks. We previously discussed the trademark infringement arbitration, in which an arbitrator found against VPX and awarded Monster Energy Company or MEC and Orange Bank, Inc., 175 million in damages, attorneys fees and costs and an ongoing 5% royalty on future sales of certain Bang energy product. VPX has appealed the judgment. Additionally, on September 29, 2022, a jury in the United States District Court for the Central District of California returned a verdict awarding MEC approximately 293 million in damages on its claims against VPX for false advertising, misappropriation of trade secrets and interference of Monster's contract over shelf space with certain key retailers. On April 12 2023, the district court granted MECs motion for permanent injunction which amongst other things and joins VPX and former CEO, Jack Owoc from falsely or deceptively claiming that Bang or any other beverages contain creatine or a form of creatine. The parties have completed briefing the remaining post-trial issues. On October 10, 2022, VPX along with certain of its domestic subsidiaries, and affiliates filed for protection under Chapter 11 of the bankruptcy code in the Southern District of Florida. While those proceedings are moving forward, the VPX is undertaken to make interim royalty payments subject to potential claw back in certain circumstances. On February 14, 2023, VPX made its first royalty payment in the amount of approximately 3.6 million. The company will not recognize either award or the royalty payments until such time as they're realized or realizable. As this litigation and bank bankruptcy proceedings are sub-judicate, we will not be answering further questions on those matters on today's call. In the first quarter, we initially launched the Beast Unleashed in six states through a network of beer distributors. We are pleased with the early results and are continuing to expand distribution into additional markets with the goal of being national by the end of the year. Net sales for Beast unleashed during the first quarter were 20.5 million. We recently relaunched Wild Bass and Hard Seltzer with new packaging and great new flavors and taste profiles. We are refreshing the Dale's Beer brand and we'll be introducing Dale's American Light Lager as part of the refresh. We are planning to launch a new flavored malt beverage line within the next few months. Our alcohol beverage innovation pipeline is robust. We look forward to sharing news of additional new product in the near future. We launched the number of new products in the United States in 2023 first quarter. In January 2023, Monster Energy zero sugar was launched at retail. Monster Energy zero sugar is available in 16-ounce cans and was specifically developed as an indistinguishable zero sugar analogue of our original unique Monster Energy green flavor. In February 2023, we launched a new flavor within our highly successful Monster Ultra line with Monster Energy Ultra Strawberry Dreams available in 16-ounce cans. In March 2023, we launched Reign Storm, which is positioned as a line of total wellness energy drinks in 12-ounce sleek cans to address a compelling opportunity in the energy drink category. Reign Storm is available in four flavors, Valencia Orange, Kiwi Blend, Peach Nectarine and Harvest Grape. Also in March, we launched Rehab Monster Wildberry Tea in 16-ounce cans. We are continuing to expand the distribution of Monster Tour Water in still and sparkling variants into additional states. We launched several new SKUs in the first quarter in 2023 in Canada. In February 2023, we launched Monster Ultra Peachy Keen, Punch Monster Ozzy Style Lemonade and Reign Rainbow Sherbet. In March 2023, we launched Monster zero sugar in Canada. There were several new SKUs in the 2023 first quarter in Latin America. In Brazil, we launched Monster Ultra Watermelon. Additionally, we revamped our previous Chaos product into the new Monster Juice Chaotic. In Mexico, Predator [indiscernible] at retail to further expand our affordable energy offerings. In Uruguay, we launched our second Ultra SKU with Monster Ultra Paradise. In Paraguay and Bolivia, we launched our first juice SKU with Monster Juice Manga Loca and additionally in Bolivia, we launched Fury Goldstrike. The first quarter of 2023 in Australia, we launched two Java Monster SKUs, Java Monster Mean Bean and Java Monster Loca Moca. In EMEA, in the first quarter of 2023, we launched Monster Reserve Watermelon, Ultra Gold, Ultra Rosa, Ultra Watermelon, Juicy Ozzy Lemonade and Juice Chaotic in a number of countries. During the 2023, first quarter we also launched additional SKUs of Burn, Predator and Reign in certain countries. In EMEA as part of an ongoing Pan EMEA launch, we expanded the distribution of our Monster Energy Lewis Hamilton 44 Zero Sugar Energy drink to an additional 22 EMEA markets in the first quarter of 2023, will be followed by another eight markets in the second quarter of 2023. During the first quarter of 2023, we launched Monster Ultra Paradise in China, Taiwan and Hong Kong. In April 2023, we launched Monster Reserve Watermelon in Japan, we are planning to introduce the Predator brand in additional countries in APAC in the course of 2023. We estimate that on a foreign currency adjusted basis, including the alcohol brand statement, April 2023, sales were approximately 9.9% higher than the comparable April 22 sales and 7.9% higher than April 2022, excluding the alcohol brand segment. We estimate April 2023 sales, including the alcohol brand segment, to be approximately 7.2% higher than in April 2022 and 5.1% higher than in April 2022, excluding the alcohol brands segment. April 2023 had one less selling day compared to April 2022. In this regard, we caution again, that sales over a short period are often disproportionately impacted by various factors such as for example, selling days, days of the week in which holidays for, timing of new product launches and the timing of price increases and promotions in retail stores, distributing centers, as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production shared goals. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter, or any future period. In conclusion, I'd like to summarize some recent positive points. One, the energy category continues to grow globally. Two, we are pleased to report that our pricing actions, which have been implemented to partially mitigate inflationary pressures have not significantly impacted consumer demand. Three, we are seeing improvements in our gross profit margins on a quarterly sequential basis. Four, our AFF Flavor Facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower land costs to our EMEA region. Five, we are enthusiastic for our 2023 new product innovations, notably Monster Energy Zero Sugar, Ultra Strawberry Dreams, Reign Storm and Pure Water in the United States and Monster Energy Lewis Hamilton 44 Zero Sugar in EMEA. We are pleased with the early results from the launch of the Beast Unleashed. We are continuing to expand distribution with the goal of being national by the end of the year. We are excited by the additional alcohol opportunities that the CANarchy acquisition presents. We are pleased with the initial results of our launch of Reign Storm, our new line of Total Wellness energy drinks. Eight, finally, we are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands, and additional number of international countries. I would now like to open the floor to questions about the quarter. Thanks. Operator: Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Our first question today comes from Peter Grom from UBS. Please go ahead with your question. Peter Grom: So maybe just two quick margin questions, if I may. So, one, I know you don't want to get into guidance, but you continue to comment on the sequential margin performance or improvement. So with pricing, coming in and cost moderating, should we expect to see sequential improvement in gross margin from here as we move through the year? And then, just somewhat related, as we look at selling expense as a percentage of sales today versus 2019? It's down quite a bit. So as we look ahead, is this high single digit rate that we've seen over the past couple of years sustainable? Or would you be looking to take that higher over time, particularly as gross margin begins to improve? Thanks. Hilton Schlosberg: So addressing your first question on gross margin, as you know, we don't give guidance. But what we can say and what we have said in previous quarters, and where we've spoken about the price increases, we have [rolling] [ph] price increases in EMEA during the whole year. So that will escalate as the year goes through. In the U.S., we had a price increase, as you know, late last year, and we had a price increase on April 1 in larger sizes the 19.2, 18.4 and the 24 ounce can. So that's something that will be reflected continually as the year goes through. In addition, we took up some pricing later on in the year in LATAM and some in LATAM in 2023, as well. In Asia Pacific, we largely took up pricing in Q1 of this year. So they will be a benefit, I believe from pricing as we go through 2023. With regard to costs, that's something that we continue to evaluate. We know that, for example, aluminum has kind of stabilized which is positive for, I think, for us. And we've also had a situation where we've seen freight rates reducing, and we balanced freight in two sections in our P&L trade-in for materials and for finished goods as they move to distribution centers are regarded as part of cost of sales and freight-out is obviously regarded as an operating expense. So we are seeing some improvements. We mentioned, I think on previous calls, and in the script today, that there are some challenges in our cost of sales, including what we're seeing certain ingredients, and co-packing fees. So overall, I think, I could see a situation where we have the price -- we have the price benefits, they seem as if the -- they have been sensibly executed and that we haven't had major resistance from customers. So I think that gives you the background probably to make your own assessment. And then on your second question on selling expenses, we work towards a budget on selling expenses, which we believe are necessary to execute our play. And what those budgets are and where they end up is a factor that we very seriously consider in dealing with the needs of our consumer and the needs of the market. So, we don't really compare it to themselves and at the end of the quarter everybody else does. But we look at the needs of the marketing programs, and what we need to do to keep our brands exciting and in the eyes of the consumers. Operator: Our next question comes from Filippo Falorni from Citi. Please go ahead with your question. Filippo Falorni: You talked about the energy drink category remaining solid, can you talk about what you're expecting in the balance of the year for the category, are you seeing any signs of potential weakness at the low end of the consumer base, or you're seeing trends held up in the U.S. particularly? Thank you. Hilton Schlosberg: So we don't give guidance, Rodney, you go ahead and respond to that. Rodney Sacks: Go ahead. Hilton Schlosberg: No, please. Now you go ahead, that's fine. Rodney Sacks: We don't give guidance and the category has in line with other consumer products in a little bit of a slowing, I think there's been a lot of price increases across not only the energy category, but all beverage and consumer product. And so there has been a little bit of slowing, I think there's been a little bit of trimming of benefits under the snap programs that were increased during COVID. And those are sort of being pulled back a little bit generally now. So I think you would see a little bit of a sort of rationalization by buyers as they have slightly less disposable income. But again, I think that will settle down. We are overall though, if you look at the numbers, we gave you the Nielsen numbers, there is still healthy growth in the energy drink category as a category, it's continuing to grow and expand. But other than the direction you're seeing from Nielsen, we really can't, and won't give any further direction. But obviously, we think that certainly in dollar terms, the category will continue to grow. In actual volumes, they may be a little bit of a slowing. But I think that we will think that it'll be more than made above by dollar increases in pricing. Operator: Our next question comes from Bonnie Herzog from Goldman Sachs. Please go ahead with your question. Bonnie Herzog: I guess I wanted to ask a little bit about some of the innovation, just maybe a little more color on, Zero Sugar, the Beast, Reign Storm, and how they're performing and whether they're meeting your expectations in terms of buy-in from retailers and shelf space allocation. I guess I'm hearing you got a fair amount of incremental space. So just wanted to verify that with you. And then wanted to understand on Zero Sugar in particular, [Technical Difficulty] most of that during Q1 or you still expecting to kind of roll that out in certain market in Q2? Thank you. Hilton Schlosberg: Okay. So if you look at Zero Sugar, we launched Zero Sugar, we rolled it out in Q1. So most markets by far the majority rolled out Zero Sugar in Q1. As regards Zero Sugar, we have actually been very pleased with the results. We had good expectations for the product and our expectations seem to have been realized. We're not seeing a big dip in green. So a lot of people have asked questions about cannibalization. But we're not seeing a big dip in green at all. I mean, green seems very much to be holding its own. So I think that as we look at shelf space, obviously we've negotiated very actively this year for additional shelf space. And we have achieved really commendable increases in shelf space. Not only in convenience, not only in the convenience independence, but across the various channels. Rodney Sacks: The only thing I would add is, Bonnie, internationally, we do have plans to also roll up the Zero Sugar into a number of international markets but that it's not going to go everywhere at the same time we have other things on the agenda today need to roll out. So there'll be an orderly rollout of other innovation internationally, but in many markets including in EMEA, we will be rolling up to Zero Sugar as well. Hilton Schlosberg: Yes. And we just launched in Canada as well. So really exciting times, I think for that particular product. Rodney Sacks: Now with regard to the expectations, Bonnie's, Reign Storm really was launched right at the end of the first quarter. So it's just too early to tell. But obviously, we are optimistic about it. Again, and with regard to the Beast, we rolled it out slowly. And we are trying to do that in a cautious way. And we so far, the result, sales, some of the repeat sales have also been encouraging. And but again, it's early on, we have a lot of additional innovation in alcohol that we are looking at and planning. So we were quite excited, it just takes time. And we are rolling it out through this whole new distribution system, which we are continuing to build distributed by distributor, so it's taking time to get there. But as we said on the call, we hope to be national, by the end of the year, we hope to have additional product. So the whole system, I think is working, moving forward according to plan. Operator: Our next question comes from Chris Carey from Wells Fargo Securities. Please go ahead with your question. Chris Carey: Just one clarification or maybe if you can help the 18.6 and the 24 ounce? How meaningful are those as a percentage of your overall portfolio? Or is there just any way to frame the size of that price increase as a contribution to total business? And then, just a bigger picture one, that I feel a little bit, but I get questions pretty often just about succession planning and long-term succession planning on Monster and how strong is the bench, and how much of that bench building is going on behind closed doors. It just comes up enough that, I thought maybe this could be an interesting place to just maybe offer some perspective on just how you think about developing talent and developing talent for the long-term. So, thanks for the -- maybe a little bit of help on the scope of the pricing and just on talent development. Thanks. Hilton Schlosberg: Chris, I would refer you to the Nielsen numbers. And you'll see that those larger sizes are less than 10%, probably in the 6% to 8% range. But if you look at Nielsen, you'll be able to get a good assessment of that percentage. Secondly, on succession, obviously, the Monster Board is, and Rodney and myself are really concerned about succession. And something that we are addressing, and we continue to address on an ongoing basis. We have a very, in our view, a deep strength in the bench of the team below us that are being developed and are growing and we are helping them develop. So I think from that perspective, it's something that ourselves, the board, are very well aware of. And we'll continue to address that issue. However, I don't think Rodney is going anywhere in the foreseeable future and frankly, neither am I. So we are here and will help develop and segue when the time is right, a new management team. Operator: Our next question comes from Andrea Teixeira from JPMorgan. Please go ahead with your question. Andrea Teixeira: I just have a clarification. So went back to Bonnie's question on how accretive Monster Zero has been against Ultra. In absolute terms in numbers in the U.S. it seems there has been a great launch based on the Nielsen data. But it obviously as you look at Ultra, it also has been coming at some deceleration which Obviously one would expect. Can you comment on who your first of all, how is it tracking against plan? And in terms of shelf productivity that you pointed out that you're gaining distribution and trying to make it obviously accretive? How is it number one tracking against plan. And number two, how you're seeing that, going above and beyond Ultra? Hilton Schlosberg: Okay. So remember that we had a product called Absolutely Zero. And Zero Sugar is really the new variant of Absolutely Zero. So it's a product that was in the market that has been replaced by Zero Sugar. So when you compare the numbers for Zero Sugar, you can see that on an ACV basis, we moved from 42% from Absolutely Zero to 72%, for Zero Sugar. So the distribution of Zero Sugar is increasing, and it's climbing. It's not that it's a new product. We had, as I said, a product called Absolutely Zero. And so when we look at Zero Sugar, we look at our plans, we look at our plans for Ultra, we have been very satisfied so far, with the launch of Zero Sugar. You look at the ACV growth. And the sales per point and it's something that we really as -- and I said this earlier, we really are very excited with Zero Sugar. Rodney Sacks: Just maybe I will just add on the Ultra side. We have had a really successful launch of Ultra Strawberry Dreams. I think that some of the ACV, if you look at your Nielsen's, you'll see some of the ACV or some of the additional flavors Ultra -- Ultra Heavy in fact decreased a little bit. I think that's something we just need to look at and attend, I think as you get go through this change and introducing of new flavor, sometimes -- some of these additional SKUs that are not the top three, or four or five, sometimes get a little bit lost in the wash. So that's where we've seen a little bit of a drop-off in some of those additional flavors. But I think there's -- we think that there are solid and sound products and I think, we just need -- just really make sure we focus on just reestablishing some of the distribution levels on those. And we think those sales will continue to increase. Sales of Ultra as a brand or sub-brand have gone up in the United States and internationally. But I think that we've had, as I said, some of those flanker sort of flavors are, we need to just put some focus behind which we are doing. Operator: And our next question comes from Mark Astrachan from Stifel. Please go ahead with your question. Mark Astrachan: Two housekeeping questions. One cash balance, it keeps growing. Any thoughts on how you'd like to implement spending some of it share repurchase? It was nice to see there were some interest income this quarter, I assume we shouldn't be thinking to that continues to grow. And then, on the alcohol brands gross margin, the implied number this quarter was a little better sequentially than 4Q, anything is there kind of beneath the surface that we should consider and trying to model that business because it's clearly a lot harder to see what's going on there. And then sort of the legacy business. Thanks. Rodney Sacks: On the alcohol side, I think that what we did was -- we had quite a drop off in the seltzer business that which is part of the brands that we acquired, and that affected in operating business where they're running their own production that affected their overhead costs, because you've got some fixed costs. So as you noted in the earlier, last quarter of last year, we reported on the margins were really very [indiscernible] on the -- what we call the legacy business. Those margins are improving. We're busy sort of refitting the one line out to be able to increase the capacity for doing the Beast products. And as we go forward, we will start seeing an improvement in the margin in the legacy business. The margins on the Beast side are healthier, quite a lot better than on the legacy craft business side. And as again, those are probably smaller, lower now than they'll be as we start of getting some scale, we are doing some co-packing, we will be using our own facility and we will obviously be maximizing that. And as we go forward, we will start working on using additional co-pack as we will actually lower our costs. So we do think there will be additional margin going forward, but it is a thinner margin product, and we obviously are traditionally used to seeing on the Monster side. And maybe Hilton, you want to take the question on the cash side. Go ahead. Hilton Schlosberg: Mark, we continually are examining options to deal with our cash balances, and it's something that, again, is a board issue that is receiving attention. So, I really don't want to comment, more than we have that -- intention is to hopefully buy back shares continue that program. But we are looking at -- some opportunities for further investments. And that's too premature to talk about them. But there are a number of possibilities that that we're looking at. And in addition, it is our plan to continue buying back our shares. Endof Q&A: Operator: And, at this time, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Mr. Rodney Sacks for any closing remarks. Rodney Sacks: Thank you, all for the company. I'd like to thank everyone for their continued interest. We continue to believe in the company and our growth strategy. And we remain committed to continuing to innovate, to develop and differentiate our brands and to expand the company both at home and abroad. And in particular, capitalizing on our relationship with the Coca-Cola Bottlers System. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain safe and healthy. And thank you for your attendance. Operator: Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.

Operator: Good afternoon, and welcome to the Monster Beverage Corporation Fourth Quarter and Full Year 2022 Financial Results 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 also note, today’s event is being recorded. I’d now like to turn the conference over to Rodney Sacks and Hilton Schlosberg, Co-CEOs for Monster Beverage. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I’m Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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 February 28, 2022, and quarterly reports on Form 10-Q, including the sections contained therein entitled, the Risk Factors and Forward-Looking Statements, for a discussion on specific risk and uncertainties that may affect our performance. The company assumes no obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company achieved record fourth quarter net sales of $1.51 billion in the 2022 fourth quarter, 6.2% higher than net sales of $1.43 billion in the 2021 comparable period and 11.9% higher on a foreign currency adjusted basis. Since the beginning of the COVID-19 pandemic and the subsequent global supply chain challenges and disruptions, the company has prioritized product availability for its consumers and customers, despite adversely impacting gross margins and operating income. The company continues to stand by its strategy to ensure product availability and solidify the continued long-term growth of the company's brands. CANarchy was acquired in February 2022 to facilitate the company's entry into the alcohol beverage sector. During 2022, CANarchy sustained margin pressures, cost of acquisition and integration, as well as certain other costs in preparation for the launch of the company's new alcohol product lines. Gross profit as a percentage of net sales for the 2022 fourth quarter was 51.8% compared with 53.9% in the comparative 2021 fourth quarter. The decrease in gross profit as a percentage of net sales for the 2022 fourth quarter as compared to the 2021 fourth quarter was primarily the result of: one, increased ingredients and other input costs, including secondary packaging materials and increased co-packing fees; two, geographical and product sales mix; and three, increased logistical costs. The decrease in gross profit as a percentage of net sales for the 2022 fourth quarter was partially offset by pricing actions. Gross profit as a percentage of net sales increased on a sequential quarterly basis to 51.8% in the 2022 fourth quarter from 51.3% in the 2022 third quarter. Gross profit as a percentage of net sales, excluding gross profit for the company's Alcohol Brands segment increased on a sequential quarterly basis to 52.5% in the 2022 fourth quarter from 51.9% in the 2022 third quarter. We continue to believe that some of these increased costs we are experiencing are likely to be transitory. The depletion of our remaining higher cost imported can inventories will continue over the next few quarters and should be fully utilized during 2023. We note that our major promotion in the fourth quarter was executed with lower-cost, locally sourced cans in the United States and globally. We estimate that of the increasing costs of sales in the 2022 fourth quarter, approximately $60 million, was comprised of one, approximately $39.6 million due to increased ingredient and other input costs, including primary and secondary packaging materials and increased co-packing fees; two, approximately $12.5 million due to geographical and product sales mix; and three, approximately $7.9 million due to increased logistical costs. We continue to experience significant increases in distribution expenses, primarily the result of increased warehousing expenses as well as other logistical expenses, which adversely impacted operating expenses. The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. We are starting to see a reduction in freight rates in the United States. Operating expenses for the 2022 fourth quarter was $390 million compared with $354.7 million in the 2021 fourth quarter. As a percentage of net sales, operating expenses for the 2022 fourth quarter were 25.8% compared with 24.9% in the 2021 fourth quarter and 28.9% in the 2019 fourth quarter pre-COVID. Distribution expenses for the 2022 fourth quarter increased to $76.1 million which is an increase of 9% or 5% of net sales compared to $69.8 million or 4.9% of net sales in the 2021 fourth quarter and 3.5% of net sales in the 2019 fourth quarter pre-COVID. The $6.3 million increase in distribution expenses was primarily due to higher warehouse expenses of $11.2 million as a result of higher raw materials and finished product inventories in the United States and EMEA, partially offset by decreased freight out expenses of $4.4 million. The increase in other operating expenses was primarily due to increased payroll expenses and increased general and administrative expenses. We are now able to purchase aluminum cans from local sources globally. We have seen a reduction in cost of sales through increased use of domestic cans, as we continue to cycle through existing inventories of imported cans over the next few quarters. We have rebuilt finished product inventory levels globally to return to our Orbitz strategy of producing closer proximity to our customers. The cost of repositioning finished products to distribution centers are included in freight-in costs. Operating income for the 2022 fourth quarter decreased 4.5% to $394.4 million from $412.9 million in the 2021 comparative quarter. Net income decreased 6.1% to $301.7 million, as compared to $321.3 million in the 2021 comparable quarter. Diluted earnings per share for the 2022 fourth quarter decreased 4.9% to $0.57 from $0.60 in the fourth quarter of 2021. Diluted earnings per share, exclusive of the Alcohol segment operating losses and the adverse impacts of foreign currency exchange rates, net of tax, was $0.64 in the 2022 fourth quarter. Through pricing actions, the company was able to achieve positive pricing appreciation in the United States and EMEA. Due to continued cost pressures, the company implemented a net sales price increase in the range of 6% market-wide in the United States effective September 1, 2022, and will be implementing a price increase on its 24-ounce line effective April 1, 2023. The company also implemented price increases in the second half of 2022 in certain international markets and will be implementing additional price increases on a phased approach during the first half of 2023 in a number of international markets. The company will continue to review further opportunities for price increases and pricing actions in order to mitigate inflationary pressures. According to the Nielsen reports for the 13 weeks through February 11, 2023, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category including energy shots increased by 13.1% versus the same period a year ago. Sales of the company's energy brands, including Reign, were up 12.1% in the 13-week period. Sales of Monster were up 11.3%, sales of Reign were up 15.6%, sales of NOS increased 20.6%. And sales of Full Throttle increased 1.3%. Sales of Red Bull increased 11.5%. Sales of Rockstar increased by 3.4%. And sales of 5-hour decreased 2.4%. VPX Bang sales decreased 47.1%. The company continues to have market share leadership in the energy drink category in the United States for the 13 weeks ended February 11, 2023. According to Nielsen, for the four weeks ended February 11, 2023, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots, in dollars, increased 15.1% over the same period the previous year. Sales of the company's energy brands, which include Reign, increased 14.8% in the four-week period in the convenience and gas channel. Sales of Monster increased by 13% over the same period versus the previous year. Reign sales increased 26.7%. NOS was up 23.7%. And Full Throttle was up 14.9%. Sales of Red Bull were up 11.9%, Rockstar was up 7%; and 5-hour was down 0.3%. VPX Bang sales decreased 48%. According to Nielsen, for the four weeks ended February 11, 2023, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased from 37.1% to 37%. Monster share decreased from 31.5% a year ago to 30.9%. Reign's share increased 0.2 of a share point to 2.7%. NOS' share increased 0.2 point to 2.6%. And Full Throttle share remained at 0.7%. Red Bull share decreased 1 point from 36.1% a year ago to 35.1%. VPX Bang share decreased 3.8 points to 3.1%. 5-Hour share was lower by 0.6 of a point at 3.9%. Rockstar share was down 0.3 of a point to 3.7%. CELSIUS' share is 4.3%. Alani Nu’s share is 0.7%. And GHOST's share is 2.5%. According to Nielsen, for the four weeks ended February 11, 2023, sales in dollars of the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel, increased 6.2% over the same period the previous year. Sales of Monster, including Java Monster 300 and Java Monster Nitro Cold Brew were 8.1% higher in the same period versus the previous year. Sales of Starbucks Energy were 8% higher. Java Monster's share including Java Monster 300, Java Monster Nitro Cold Brew of the coffee plus energy category, which primarily includes Java Monster, Java Monster 300, Java Monster Nitro Cold Brew, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee for the four weeks ended February 11, 2023, was 54.7%, up 1 point while Starbucks Energy share was 44.9%, up 0.8 of a point. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended December 31, 2022, the energy drink category increased 13.3% in dollars. Sales of the company's energy drink brands increased 16.3% versus a year ago. The market share of the company's energy drink brands were was 41%, up 1.1 points. Monster sales increased 18.3% and its market share increased 1.6 points to 36.8%. NOS' sales decreased 7% and its market share decreased by 0.3 of a point to 1.4%. Full Throttle sales increased 8.4%, and its market share remained at 0.5 of a percent. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 26.6% for the month of January 2023. Monster sales increased 34.1%. Monster's market share in value increased 1.7 points to 29.4% against the comparable period the previous year. Sales of Predator increased 106.2%, and its market share increased 2 share points to 5.1%. The Nielsen statistics for Mexico cover a single month, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen for the month of December 2022 compared to December 2021, Monster's retail market share in value increased in Argentina from 43% to 53.5%, in Chile, from 34.5% to 41.7%. In Brazil for the month end January 2023, our share increased from 39.9% to 41.1%. Monster is the leading energy brand in value in Argentina, Brazil and Chile. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period until the end of January 2023, Monster's retail market share in value as compared to the same period the previous year, grew from 14.2% to 15.2% in Belgium, from 30.7% to 31.8% in France from 29.5% to 31% in Great Britain, from 27.3% to 32.7% in Norway, from 27.7% to 27.8% in the Republic of Ireland, from 38.6% to 40.4% in Spain and from 15.1% to 16.5% in Sweden. Monster's retail market share in value as compared to the same period the previous year declined from 8.1% to 4.7% in the Netherlands and from 20% to 19.2% in South Africa. According to Nielsen, in the 13-week period until the end of December 2022, Monster's retail market share in value as compared to the same period the previous year grew from 16.3% to 18.4% in the Czech Republic from 26.5% to 27.8% in Denmark and from 27.6% to 13.5% in Italy. Monster's retail market share in value as compared to the same period the previous year declined from 14.6% to 13.9% in Germany, from 38.1% to 36.8% increase and from 19% to 18.3% in Poland. According to Nielsen, in the 13-week period until the end of December 2022, Predator’s retail market share in value as compared to the same period the previous year grew from 20.4% to 31.1% in Kenya and from 14.2% to 19.2% in Nigeria. According to IRI in Australia, Monster's market share in value for the four weeks ending January 29, 2023, increased from 13.1% to 16.1% as compared to the same period the previous year. Mother's market share in value decreased from 11% to 10.7%. According to IRI in New Zealand, Monster's market share in value for the four weeks ended January 22, 2023, and remained at 13% as compared to the same period the previous year. Live+ market share in value decreased from 6.7% to 6.1%, and Mother's market share in value increased from 5.8% to 6%. According to INTAGE in Japan in the month of ending December 2022, Monster's market share in value in the convenience store channel as compared to the same period the previous year grew from 53.7% to 54.7%. According to Nielsen in South Korea in the month ending December 23 to Monster's market share in value in all after it's combined as compared to the same period the previous year, increased from 60.2% to 64.2%. Again, point out that certain market statistics that cover single months or four week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the US were $542.5 million, 35.9% of total net sales in the 2022 fourth quarter compared to $508.1 million or 35.7% of total net sales in the corresponding quarter in 2021. Foreign currency exchange rates had a negative impact on net sales in US dollars by approximately $81.9 million in the 2022 fourth quarter. Included in reported geographic sales are our sales to the company's military customers, which are delivered in the US, transshipped to the military and their customers overseas. In EMEA, net sales in the 2022 fourth quarter decreased 2.3% in dollars, but increased 14.7% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales in the fourth quarter, was 33.9% compared with 32.6% in the same quarter in 2021 and compared to 34.7% in the third quarter of 2022. The company is continuing to address the controllable challenges in this supply chain in EMEA. We're also pleased that in the 2022 fourth quarter, Monster gained market share in Belgium, Czech Republic, Denmark, France, Great Britain, Italy, Norway, the Republic of Ireland, Spain and Sweden. In Asia-Pacific, net sales in 2022 fourth quarter increased 0.5 point in dollars and increased 20.6% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales was 42.6% versus 41.4% over the same period in 2021. Due in part to a product supply issue with an ingredient that impacted a number of our products in Japan, but has now been resolved, net sales in the 2022 fourth quarter decreased 14.4% in dollars, but increased 10% in local currency. Sales in the 2022 fourth quarter continued to be impacted by COVID in certain channels. In South Korea, net sales increased 13.9% in dollars and increased 34.4% in local currency, as compared to the same quarter in 2021. Once the remains -- in China, sales volume in the fourth quarter increased 5.4%, as compared to the same quarter in 2021, largely impacted by COVID-related lockdowns. We remain optimistic about the prospects for the Monster brand in China. In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 2.9% in dollars and 16.7% in local currencies. In Latin America, including Mexico and the Caribbean, net sales in the 2022 fourth quarter increased 45.2% in dollars and increased 57.7% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales was 28.4% for the 2022 fourth quarter versus 38.6% in the 2021 fourth quarter. In Brazil, net sales in the 2022 fourth quarter increased by 19.9% in dollars and 16.6% in local currency. Net sales in Mexico increased 64.8% in dollars and 16.6% in local currency in the 2022 fourth quarter. Net sales in Chile increased 1% in dollars, but increased 16% in local currencies in the 2022 fourth quarter. Net sales in Argentina increased 92% in dollars and increased 196.6% in local currency in the 2022 fourth quarter. We will now provide an update on our litigation with Vital Pharmaceuticals, Inc., which will be referred to as VPX, the maker of Bang energy drinks. We previously discussed the trademark infringement arbitration in which an arbitrator found against VPX and awarded Monster Energy Company, or MEC and Orange Bank, $175 million in damages, attorney fees and costs and an ongoing 5% royalty on future sales of certain Bang energy products. VPX has appealed the judgment. Additionally, on September 29, 2022, a jury in the United States District Court for the Central District of California returned a verdict awarding MEC approximately $293 million in damages on its claims against VPX for false advertising, misappropriation of trade secrets and interference with Monster's contracts over shelf space with certain key retailers. The parties are briefing post-trial issues. On October 10, 2022, VPX, along with certain of its domestic subsidiaries and affiliates filed for protection under Chapter 11 of the bankruptcy code in the Southern District of Florida. While those proceedings are moving forward, VPX has undertaken to make interim royalty payments subject to potential claw-backs in certain circumstances. On February 14, 2023, VPX made its first royalty payment in the amount of approximately $3.6 million. The company will not recognize either award or the royalty payments until such time as they are realized or realizable. As the litigation and bankruptcy proceedings are subjudicate, we will not be answering further questions on those matters on today's call. In the first quarter of 2023, we launched The Beast Unleashed in six states through a network of beer distributors. The Beast Unleashed is a flavored malt beverage with 6% alcohol by volume based on Monster's well-known and popular flavor profiles. We are pleased with early results and plan to expand into additional markets in the second quarter of 2023, with the goal of being national by the end of the year. We recently launched Wild Basin Hard Seltzer with new packaging and great new flavors and taste profiles. The Dale's Beer family will get a refresh in the second quarter of 2023, including the introduction of Dale's American light lager and easy-drinking lager with 4.2% alcohol by volume, 95 calories and 2.5 carbohydrates per 12-ounce serving. Our alcohol beverage innovation pipeline is robust. We look forward to sharing use of additional new products in the future. In the 2022 fourth quarter in the United States, Monster Reserve Orange Dreamsicle was launched at retail to expand our Monster Reserve line. Monster Energy Zero Sugar was launched at retail in United States in January 2023. Monster Energy Zero Sugar was specifically developed as an indistinguishable zero sugar analog of our original unique Monster Energy Green flavor. We are excited about the opportunities that this product will provide to our Monster consumers who have come to enjoy the unique taste profile of our original Monster Green flavor, which remains our leading flavor. Earlier this month, we also launched Monster Energy Ultra Strawberry Dreams, Monster Reserve Kiwi Strawberry, Monster Nitro Cosmic Peach and Java Monster Cafe Latte. Initial response from consumers has been positive. In February 2023, we launched the flavor of Reign called Tropical Storm in the United States and also commenced with the launch of Monster Tour Water, a pure unflavored water line in still and sparkling variants in 19.2 ounce cans. We are planning to launch Reign Storm, which is positioned as a total wellness energy drink in 12-ounce sleek cans at retail in March 2023 in four flavors to address a compelling opportunity in the energy drink category. We launched several new SKUs in October in Latin America. In Chile, we expanded our Ultra line by launching Ultra Gold and Ultra Watermelon. In Mexico, we introduced Monster Energy Reserve Watermelon. In Puerto Rico, the Cayman Islands, Curico and Bermuda, we expanded our Reign portfolio and launched Reign White Gummy Bear and Reign Rainbow Sorbet. In Trinidad and Tobago, we launched Monster Pipeline Punch. In Australia, we expanded our core portfolio and launched Monster Super Dry. In New Zealand, we expanded our juice portfolio and launched Monster Juice Papillon, which is currently exceeding our expectations. In EMEA, in the fourth quarter of 2022, we launched Monster Nitro, Monster Reserve Watermelon and White Pineapple in a number of countries. In certain countries, we also launched juiced Aussie Lemonade, Ultra Gold, Ultra Rosa and Ultra Watermelon during the 2022 fourth quarter. During the 2022 fourth quarter, we also launched additional SKUs of Burn and Reign in certain countries. In EMEA as part of an ongoing plan, EMEA launch, we commenced distribution of our Monster Energy Lewis Hamilton 44 Zero Sugar Energy drink in select EMEA markets late in the fourth quarter of 2022 to be followed by an additional 25 EMEA markets in the first quarter of 2023. During the fourth quarter of 2022, we launched Monster Rehab Lemon tea in Japan, Monster Ultra Watermelon in Turkey. Monster Ultra Paradise in Vietnam, Predator in Malaysia, and we continued the national rollout of Predator India. We are planning to introduce the Predator brand in additional countries in APAC during the course of 2023. We estimate that on a foreign currency adjusted basis, including CANarchy, January 2023 sales were approximately 16.1% higher than the comparable January 2022 sales and 13.8% higher than January 2022, excluding CANarchy. We estimate January 2023 sales, including CANarchy to be approximately 12.9% higher than in January 2022 and 10.6% higher than in January 2022, excluding CANarchy. January 2023 had the same number of selling days as January 2022. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partner maintained inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continues in certain regions, our new product innovation launches in those regions could be delayed. On November 2, 2022, the Board of Directors authorized a new share repurchase program for the repurchase of up to an additional 500 million of the company's outstanding common stock. During the 2022 fourth quarter, the company purchased approximately 2.3 million shares of its common stock for a total amount of $201.6 million, excluding broker commissions under the June 2022 repurchase plan, leaving approximately 682.8 million remaining available for repurchase under the previously authorized repurchase programs. The company today announced that its Board of Directors has approved and declared a 2-for-1 split of its common stock that will be effected in the form of a 100% stock dividend. Each stockholder of record on March 13, 2023, will receive a dividend of one additional share of common stock for each then held share to be distributed after the close of trading on March 27, 2023. The company anticipates its common stock to begin trading at the split adjusted price on March 28, 2023. In conclusion, I'd like to summarize some recent positive points. One, the energy category continues to grow globally; two, the company has increased its raw material and finished product inventories to better service customers and ensure availability of its products. Three, we are seeing improvement in our gross profit margins on a quarterly sequential basis due to supply chain normalization; four, our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower land costs to our EMEA region. Five, we are enthusiastic for only 23 new product innovations notably Monster Energy Zero Sugar, which launched in January 2023 in the United States and Monster Energy Lewis Hamilton 44 Zero sugar energy drink in EMEA. We are also particularly enthusiastic for the planned launches of rainstorm in March 2023 as well as Tour Water in the United States. We are pleased with the early results from the launch of The Beast Unleashed, our first flavored malt beverage alcohol product in six states and the planned rollout to additional states, as well as the additional alcohol opportunities that the CANarchy acquisition presents. Seven, we are planning to launch Reign Total Body Fuel high-performance energy drinks in additional international countries. And finally, we are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in an additional number of international countries. I would now like to open the floor to questions about the year. Thank you. Operator: We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Peter Grom of UBS. Please go ahead. Peter Grom: Thanks, operator, and good evening or good afternoon everyone. So, Hilton, I guess, I wanted to ask about gross margin. You mentioned in the release that you expect some of these cost pressures you’ve experience to be transitory, whereas others remain challenging. And I guess maybe just to start, is there any way to frame how much of the drag on gross margin is still a result of these imported cans? And then just looking ahead in the context of pricing, the cost backdrop you've outlined and kind of the modest sequential improvement we saw sequentially, how would you frame the margin recapture opportunity looking out to next year? Thanks. Hilton Schlosberg: Okay. Well, if you look back at what happened in the fourth quarter, we had a price increase in September 1 in the US. We had some price increases internationally during 2022 and into the fourth quarter of 2022. We are increasing pricing in many international markets on a phased basis starting in the early part of 2023. So, a lot of the increased costs that we have been absorbing should be accommodated by increased pricing. But looking forward, we all know what's happening with aluminum. It's coming down. Certain other commodities are coming down. In Europe, we see energy coming down. So overall, I think with regard to margin, we are actually in a good place. And as you saw in this quarter, we were able to move margin on a sequential basis. We do, however, have certain costs that are not going away. For example, co-packing fees have gone up. The sugar is in tight supply because of weather situations. So, there are positives as well as negatives in the system. As regards to the international cans, we don't have that significant quantity left in terms of what the impact will be on gross margin. So, I think we've just got to work through those cans. They are green and ultra-white. We'll look through them and will be good. The only issue is that we do have promotional cans from time to time. And as I've spoken on this call on a number of occasions, these cans are not promotional cans. They're just straight cans that we use in non-promotional periods. And also, it depends -- we have other obligations with our can companies. So, it's a question of sourcing cans on the most optimal place to be able to co-pack. So that may be too long an explanation, but I hope it gave you a sense of what we're seeing from the sand. Operator: The next question comes from Chris Carey of Wells Fargo Securities. Please go ahead. Chris Carey: Hi everyone. So, I just wanted to follow-up on that, but then ask question. So, Hilton, would you expect sequential gross margin improvement from here on steady clip just given pricing and some improvement in commodities or overall cost inflation. I appreciate there are other inflationary factors. But would you expect to continue to sequentially improve from here? So that's just a follow-up. But then from a US perspective, I think one of the things that's coming up tonight is, you had mid-single-digit pricing to high-single-digit pricing in the US in September and yet US sales were 6%. So, can you talk to any -- was there any pull forward of demand because of the pricing actions? Were there any promotions in the quarter behind the pricing? Maybe can you just help reconcile the revenue growth in the quarter in the US, which is basically in line with the pricing that you're taking? So, thanks for that follow-up on gross margins in the US comment. Hilton Schlosberg: Okay. Chris, to answer your first question, we don't give guidance. And I actually gave quite a robust explanation of what we see the runway for margins. So, I just really don't want to estimate it because we really don't give guidance. But I think I gave you a good sense of where we are, probably too much, but that is where it is. In respect of the price increase in the US in September, we actually limited the bottlers to the extent of how much they could buy in. So, I don't think that there was -- in fact, we don't think there was any much pull forward from Q3. I think it was just a question of the market stabilizing. As you know, with when price increases are put into effect, there's always a little bit of a bump as you go into more steady waters. And everything we know and that we've heard is the price really -- the price increase is actually sticking. So, we had a little bit more promotional allowances in the fourth quarter, and you'll see that in the K is released, but that's really consistent with bleeding in a price increase to a market in the consumer goods industry. Rodney Sacks: I think the only other thing I would like to just -- maybe just to add on that is that towards the end of the fourth quarter, I think we were not alone. I think there was a number of companies felt some softness in the consumer pool in -- primarily in December. But that was -- and that happened. And then we think we've seen an uptick again in January as we've indicated from our January numbers and you can see from the Nielsen numbers. So, it probably was a little bit of a combination of just an initial hesitancy from consumers to the price increase and then ultimately just some consumer softness, but that seems to have remedies itself in the first quarter now? Operator: The next question comes from Andrea Teixeira of JPMorgan. Drew Levine: Hi. Thank you. This is Drew Levine on for Andrea. Thank you for taking our questions. So, Ron, I want to continue on that point on the sort of rebound in January, and it also seemed like there was an acceleration for both Monster and the category on a three-year stack or three year CAGR basis. So just wondering what you're sort of attributing that underlying strength in consumption too, do you think it's the new product launches, increased interest in the category, gas prices coming down? So, any thoughts around that would be helpful. Thank you. Rodney Sacks: I think it's a combination of those things. I think we have got gas prices coming down. I think we have seen sort of now sort of increase in convenience. I remember, last year. Convenience was always ahead of the grocery and mass channels. And last year has sort of reversed, and convenience was a little slow. That seems to be coming back a little bit. And we just think that, again, pricing has sort of settled down a bit. But you can see across the whole category, there has been an increase in the Nielsen numbers across the category for most people and our competitors. So, we're just are seeing just a little bit of resurgence of confidence again. Hilton Schlosberg: Yes, the other thing I think you should do is have a look at the -- when we announced third quarter results, we spoke about the October sales. And if you look at the October sales, it's not inconsistent with the quarter. And I'll talk about the fourth quarter of 2022, sorry. Operator: The next question comes from Mark Astrachan of Stifel. Please go ahead. Mark Astrachan: Yes, thanks, and good afternoon. So hopefully, you're doing all right there, Rodney. Rodney Sacks: Yes, I’m fine. Just sort of remnants of a cough for the last couple of weeks. Mark Astrachan: All right. That's good. Two questions for you. One sort of related to the recent line of questioning. So, inventories were up again sequentially. How do we think about the improvement there? And does that kind of lead into flow-through of improvement in gross margin through 2023? And maybe more bigger picture, how do you think about the relative affordability of Monster and energy drinks broadly in the US after the price increase? It seems like you think that other beverage categories. Pricing has been steady riser over the last decade plus, so the gap has sort of narrowed. You took a little bit of pricing, but not nearly as much on a cumulative basis. Is there opportunity here to become more price rationale from an energy category standpoint as you kind of move forward? Hilton Schlosberg: Well, let's talk about the first question, Mark, about inventories. As you know, when we went out of 2021, our inventories were just too low. We were unable to service our customers without major upheavals and without major costs. So, we -- there was no question that the inventories had to move and move significantly up because bearing in mind where our sales are. But as we are, we believe that we have sufficient inventories, which is important for us to be able to service our customers. Are we working on getting those inventories down? Yes. And these inventories will optimize themselves in due course. So, I wouldn't be concerned. Our products have a two-year shelf life, and it's important that we maintain sufficient inventories to service our customers. And then on that second question you asked about pricing, if you know and look, for example, at a Mountain Dew at Walmart, a 20-ounce Mountain Dew Walmart, their price is $2.18. And Monster is $2.28, so we -- I think as you look at the energy category and you kind of balance the pricing of 20-ounce sodas and energy drinks. Remember that we now -- and just twisting over to convenience, we sell more -- energy drink sell more at convenience than carbonated soft drinks. So, there is a balance. And I think we have struck a very good balance. With regard to going forward, we have a price increase planned for 24-ounce, which we believe has got opportunity, and we're taking price in 24-ounce up beginning of April. So that will happen. And we'll continue to monitor the opportunities for price increases in the US, as we see margins and as we see the carbonated soft drink category, and it's a whole bundle of issues that lead us to move in the direction of whether to take price. Operator: The next question comes from Filippo Falorni of Citi. Please go ahead. Filippo Falorni: Hey. Good afternoon, guys. Rodney Sacks: Hi. Filippo Falorni: Can you talk about your expectations for your innovation pipeline in 2023, particularly on a relative basis over the last couple of years, given it seems like you have a pretty substantial pipeline this year, both in alcoholic beverage and your core energy drinks? Thank you. Rodney Sacks: The fact is that I think that we've actually got a really broad base of innovation, I think that it has sort of improved over the last few years, and I think we're sort of getting it right. I think that will be positive for the brand. We also are being able to secure a little more shelf space across the different channels, which is helping us with innovation, because in some cases, we didn't get shelf spaces in some of the years past, and it was sort of difficult to actually get the innovation to achieve the benefits that we had hoped for. We think that this year, we will be able to achieve those benefits. We have rationalized some of the SKUs. And we think that we'll be able to get a good selection of our innovation on shelf, particularly the new energy Zero Sugar and also the new Reign subline, which will going to go up against other competitors in the 12-ounce category. And there has been some additional shelf space, not only in the energy category, but also in the sort of wellness category. So, I think in some places, we'll also be able to place the Reign Storm sort of line in that area as well. So overall, we think there will be a good contribution going forward from innovation, which is exciting. And so far, initial response to things like our Ultra Strawberry Dreamsicle has been really positive from consumers and bottlers to the Zero Sugar and others. So, we are pretty optimistic and upbeat about innovation this year. Also, we were introducing a lot of multipacks to try and increase the take home, particularly in places like grocery. So again, we haven't described them that much on this call, but there's a whole skew of multipack and variety packs that we're doing in a multipack, which we think will be positive for the brand this year for sales. Operator: The next question comes from Steve Powers of Deutsche Bank. Please go ahead. Steve Powers: Hey. Thanks, and good evening. Just I guess a couple of cleanups on the gross margin topic. The first one is, Rodney, I think at the start of the call, you bridged to a $60 million increase in COGS. I just wanted to clarify what that was. I think if I'm not mistaken, COGS is up like $70 million-plus. So just exactly what those numbers were and what they weren't, number one? Number two, I don't know if you can comment on the mix of cans in the fourth quarter, old higher cost cans versus current cost cans and if that was materially different than what you had seen in the third quarter? And then three, the Latin America gross margin, you called out, sales growth there is fantastic, but the gross margin has been progressively under pressure and was down, I think, 10-plus points in the fourth quarter. Just the drivers there and if you think you've got the ability to turn that gross margin progress around in Latin America? Thank you. Hilton Schlosberg: I think, Steve, we spoke about that about margins earlier on the call. Margins on a sequential basis were actually up. So, I'm really not sure what you're referring to. And the first question that we answered spoke -- I spoke quite heavily about the progression of gross margins and the pluses and the minuses. So maybe I'm missing something, but I think we did discuss margin earlier on the call. And with regard to the $60 million that we spoke about in the release, that was only -- the $60 million was comprised of $39.6 million due to increased ingredients in other input costs and 12.5 due to geographical product sales mix and 7.9 due to increased logistical costs. And the rest of the increase in cost of sales was normal increases as you would expect to -- in a normal business environment. Those are the kind of the exceptional ones that we called out. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Rodney Sacks for any closing remarks. Rodney Sacks: Thanks. On behalf of the company, I'd like to thank everyone for their continued interest. 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, capitalizing on our relationship with the Coca-Cola bottling system. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain safe and healthy. Thank you very much for your attendance. Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

Operator: Good afternoon, everyone, and welcome to the Monster Beverage Third Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Rodney Sacks and Hilton Schlosberg. Gentlemen, please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 are based on currently available information regarding 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, 2022, 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 obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company achieved record third quarter net sales of $1.62 billion in the 2022 third quarter, 15.2% higher than net sales of $1.41 billion in the 2021 comparable period and 20.2% higher on a foreign currency adjusted basis. Since the beginning of the COVID-19 pandemic and the subsequent increased demand for the company's energy drinks, the company prioritized ensuring product availability for its customers and consumers. This strategic direction has remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting the company's profitability. The company continues to stand by its strategy to ensure product availability and solidify the continued long-term growth of the company's brands. During the 2022 third quarter, the company experienced a significant increase in cost of sales relative to the comparative 2021 third quarter, primarily due to increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, increased logistical costs, increased aluminum can costs and geographical and product sales mix. We continue to believe that some of these increased costs we are experiencing are likely to be transitory. The depletion of our higher cost imported cans will continue over the next few quarters. However, our main promotion in the third quarter was executed with lower-cost, locally sourced cans in the United States and globally. We estimate that of the increasing cost of sales in the 2022 third quarter, approximately $84.2 million was comprised of approximately $40. 1 million due to increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees to approximately $24.4 million due to increased freight rates and fuel costs, including costs relating to the importation of aluminum cans; 3, approximately $11.5 million due to increased aluminum can costs attributable to higher aluminum commodity pricing; and 4, approximately $8. 2 million due to geographical and product sales mix. We continue to air freight quantities of certain ingredients internationally, particularly to EMEA, Asia Pacific and Latin America at additional costs and inefficiencies to enable timely innovation launches. We continue to experience significant increases in distribution expenses, primarily as a result of increased warehousing expenses as well as other logistical expenses, which adversely impacted operating expenses. The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. Gross profit as a percentage of net sales for the 2022 third quarter was 51. 3% compared with 55.9% in the 2021 third quarter, and 47.1% for the 2022 second quarter. The decrease in gross profit as a percentage of net sales for the 2022 third was partially offset by pricing actions, including the implementation of our general price increase in the United States effective September 1, 2022, price increases in certain international markets and reductions in promotions. Such pricing actions positively impacted gross profit margins in the 2022 third quarter. Operating expenses for the 2022 third quarter were $415.8 million compared with $344.7 million in the 2021 third quarter. As a percentage of net sales, operating expenses for the 2022 third quarter were 25.6% compared to 24.4% in the 2021 third quarter and 24.5% in the 2019 third quarter pre-COVID. Distribution expenses for the 2022 third quarter increased to $83 million, which is an increase of 27.1% or 5.1% of net sales compared to $65.3 million or 4. 6% of net sales in the 2021 third quarter and 3. 3% of net sales in the 2019 third quarter pre-COVID. The $17.7 million increase in distribution expenses was primarily due to higher warehouse expenses of $11.7 million as a result of higher raw materials and finished product inventories in the United States and EMEA as well as increased freight out expenses of $4.8 million as a result of higher outbound freight rates and fuel, increased volume and out-of-orbit freight. The increase in other operating expenses was primarily due to increased payroll expenses, increased expenditures for sponsorships and endorsements and increased expenditures for travel and entertainment. Certain of these increases were the result of the company's return to activities consistent with pre-COVID-19 levels. We have decreased our reliance on imported cans and are currently purchasing aluminum cans from local sources globally. We have seen a reduction in cost of sales through increased use of domestic cans as we continue to cycle through existing inventories of imported cans over the next few quarters. We have rebuilt and increased finished product inventory levels across the United States and the EMEA to reduce the excessive cost of long distance freight, satisfy demand and to return to our strategy of producing in closer proximity to our customers. The cost of repositioning finished products to distribution centers are included in the freight in costs. Operating income for the 2022 third quarter decreased 6% to $417.9 million from $444.5 million in the 2021 comparative quarter. Net income decreased 4.4% to $322.4 million as compared to $337.2 million in the 2021 comparable quarter. Diluted earnings per share for the 2022 third quarter decreased 3.9% and to $0.60 from $0.63 in the third quarter of 2021. Through pricing actions, the company was able to achieve positive pricing appreciation in the United States and in EMEA. Due to continued cost pressures, the company implemented a net sales price increase in the range of 6% market-wide in the United States, effective September 1, 2022. In addition to price increases or pricing actions taken earlier this year in order to mitigate inflationary cost pressures, the company implemented price increases in the second half of 2022 in certain international markets and will be implementing additional price increases early in 2023 in a number of international markets. The company will continue to review further opportunities for price increases and pricing actions in order to mitigate inflationary pressures. According to the Nielsen report for the 13 weeks through October 22, 2022, all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 11. 2% versus the same period a year ago. Sales of the company's energy brands, including Reign, were up 11.2% in the 13-week period. Sales of Monster were up 11.2%. Sales of Reign were up 2.9%. Sales of NOS increased 17.2%. And sales of Full Throttle increased 1.7%. Sales of Red Bull increased 6.6%. Sales of Rockstar increased by 6. 1%. And sales of 5-Hour decreased 1.8%. VPX Bang sales decreased 22.6%. The company has regained market share leadership in the energy drink category in the United States for the 13 weeks ended October 22, '19 -- sorry, 2022. According to Nielsen, for the 4 weeks ended October 2022, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots, in dollars increased 10. 4% over the same period the previous year. Sales of the company's energy brands, which include Reign, increased 11.8% in the 4-week period in the convenience and gas channel. Sales of Monster increased by 11.4% over the same period versus the previous year. Reign sales increased 12%, NOS was up 13. 9% and Full Throttle was up 7.1%. Sales of Red Bull were up 6. 2%, Rockstar was up 8.1%, and 5-Hour was down 2.2%. VPX Bang sales decreased 27. 3%. According to Nielsen, for the 4 weeks ended October 22, 2022, the company's market share of the energy drink category in the convenience and gas channel, including energy shots, in dollars increased 0. 5 point to 36.9%. Monster share increased from 30.8% a year ago to 31. 1%, Reign share remained at 2.4%, NOS share increased 0.1% to 2.5%, and Full Throttle share remained at 0.7%. Red Bull share decreased 1.4 points from 37.5% a year ago to 36. 1%. VPX Bang share decreased 2.5 points to 4.8%, 5-Hour share was lower by 0. 5 point at 4%. Rockstar share was down with 0.1 to 3.7%. CELSIUS' share is 2. 6%, Alani new share is 0.6%, and GHOST's share is 1.8%. According to Nielsen, for the 4 weeks ended October 22, 2022, sales in dollars of the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased 11.4% over the same period the previous year. Sales of Java Monster, including Java Monster 300 and Java Monster Nitro Cold Brew, were 10.4% higher in the same period versus the previous year. Sales of Starbucks Energy were 17.4% higher, Java Monster share, including Java Monster 300 and Java Monster Nitro Cold Brew of the coffee plus energy category, which primarily includes Java Monster, Java Monster 300, Java Monster Nitro Cold Brew, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee for the 4 weeks ended October 22, 2022, was 52.1%, down 0.5 point, while Starbucks Energy share was 46.9%, up 2.4 points. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended October 8, 2022, the energy drink category increased 15.8% in dollars. Sales of the company's energy drink brands increased 14.9% versus a year ago. The market share of the company's energy drink brands was 40.9%, down 0.3 point. Monster sales increased 17. 3%, and its market share increased 0. 5 point to 36.6%. NOS' sales decreased 11.6%, and its market share decreased 0.4 point to 1.3%. Full Throttle's sales decreased 8% and its market share decreased 0.1 to 0.05%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 26% for the month of September 2022. Monster sales increased 36.4%. Monster's market share in value increased 2. 2 points to 28.6% against the comparable period the previous year. Sales of Predator increased 94% and and its market share increased 1.5 share points to 4.4%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by 1 or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for the month of September 2022 compared to September 2021, Monster's retail market share in value increased in Argentina from 47.9% to 51.7%, and in Brazil from 37.7% to 41. 8%. Monster Energy continues to be the leading energy brand in value in both Argentina and Brazil. In Chile, Monster's retail share for the month of September 2022 decreased from 42.2% to 41. 7%. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period ending October 9, 2020, Monster's reach or market share in value as compared to the same period the previous year grew from 13. 5% to 15.5% in Belgium; from 26.6% and to 31% in France; from 28.9% to 29.9% in Great Britain; from 20. 7% to 31.6% in Norway; and from 36.9% to 40.3% in Spain. According to Nielsen, in the 13-week period ending September 11, 2022, Monster's retail market share in value and as compared to the same period the previous year grew from 27.4% to 27. 9% in Denmark; from 27.5% to 28.1% in the Republic of Ireland; and from 13. 6% to 15. 5% in Sweden. Monster's market in value as compared to the same period the previous year declined from 7.8% to 5% in the Netherlands. According to Nielsen, in the 13-week period until the end of August 2022, Monster's retail market share in value as compared to the same period the previous year grew from 15% to 18.1% in the Czech Republic; from 15.3% to 15.6% in Germany; from 28. 8% to 31.6% in Italy; and from 19. 3% to 19.4% in Poland. Monster's retail market share in value as compared to the same period the previous year declined from 38.6% to 38.4% in Greece; and from 20.1% to 19.6% in South Africa. According to Nielsen, in the 13-week period until the end of August 2022, Predator's retail market share in value as compared to the same period the previous year grew from 17.4% to 29.6% in Kenya; and from 11.9% to 17% in Nigeria. According to IRI in Australia, Monster's market share in value for the 4 weeks ending October 16, 2022, increased from 14.2% to 14.8% as compared to the same period the previous year. Monster's market share in value increased from 11.2% to 11.7%. According to IRI in New Zealand, Monster's market share in value for the 4 weeks ended October 9, 2022, increased from 12.8% to 12.9% as compare to the same period the previous year. Live+ 's market share in value decreased from 6.4% to 6%, and Mother's market share in value decreased from 6.3% to 5. 9%. According to INTAGE in Japan, in the month ending September 2022, Monster's market share in value in the convenience store channel as compared to the same period the previous year grew from 53.9% to 55%. According to Nielsen in South Korea, in the month ending September 2022, Monster's market share in value in all outlets combined as compared to the same period the previous year increased from 60.4% to 61.5%. We again point out that certain market statistics that cover single months or 4-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $610.6 million, 37. 6% of total net sales in the 2022 third quarter compared to $527.4 million or 37. 4% of total net sales in the corresponding quarter in 2021. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $71.3 million in the 2021 third quarter. Included in reported geographic sales are our sales to the company's military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2022 third quarter increased 14.1% in dollars and increased 30.4% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales for the third quarter was 34.7% compared to 37.7% in the same quarter in 2021, and compared to 26.7% in the second quarter of 2022. The company is continuing to address the controllable challenges in its supply chain in EMEA. We're also pleased that in the 2022 third quarter, Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Italy, Norway, Poland, the Republic of Ireland, Spain and Sweden. In Asia Pacific, net sales in the 2022 third quarter decreased 13.9% in dollars and decreased 1.5% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales was 37. 4% versus 43.5% over the same period in 2021, due in part to a product supply issue with an ingredient that impacted a number of our products in Japan, but which has now been resolved, net sales in the 2022 third quarter decreased 35.8% in dollars and decreased 21.2% in local currency. Sales in the 2022 third quarter remain impacted by COVID in certain channels. In South Korea, net sales decreased 8% in dollars but increased 4.4% in local currency as compared to the same quarter in 2021. Monster remains the market leader in Japan and in South Korea. In China, net sales decreased 6% in dollars and 1.8% in local currency as compared to the same quarter in 2021, largely impacted by COVID-related lockdowns. We remain optimistic about the prospects for the Monster brand in China. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 30.7% in dollars and 41.5% in local currencies. In Latin America, including Mexico and the Caribbean, net sales in the 2022 third quarter increased 63.8% in dollars and increased 74.7% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales was 34.7% for the 2022 third quarter versus 41% in the 2021 third quarter. In Brazil, net sales in the 2022 third quarter increased by 139. 4% in dollars and 142.9% in local currency. Net sales in Mexico increased 17% in dollars and 18% in local currency in the 2022 third quarter. Net sales in Chile decreased 4.4% in dollars and increased 15.1% in local currency in the 2022 third quarter. Net sales in Argentina increased 97.8% in dollars and increased 166.2% in local currency in the 2022 third quarter. We will now provide an update on our litigation with Vital Pharmaceuticals, Inc., which will be referred to as VPX, the maker of Bang Energy Drinks. We previously discussed the April 2022 final arbitration award, which the arbitrator found in favor of Monster Energy Company, or MEC, and Orange Bang Inc., and against VPX on all claims. The arbitrator awarded MEC and Orange Bang $175 million to remedy VPX' past misconduct as well as attorney's fees and costs, which amounted to nearly $9.3 million. The arbitrator also ordered VPX to pay MEC and Orange Bang an ongoing 5% royalty on all future sales of VPX Bang's energy drinks and other Bang-branded products. Pursuant to the terms of the agreement between MEC and Orange Bang, the award and future royalties will be shared equally between MEC and Orange Bang. On September 29, 2022, the United States District Court for the Central District of California entered final judgment confirming the award. On October 28, 2022, VPX filed a notice of appeal of the District Court's final judgment confirming the award. The company will not recognize the award or royalties until such time as they are realized or realizable. Additionally, on 29 September 2022, a jury in the United States District Court for the Central District of California, returned a verdict awarding MEC approximately $293 million in damages on its claims against VPX for false advertising, misappropriation of trade secrets and interference with Monster's contracts over shelf space with certain key retailers. MEC will not recognize the jury award until such time as the award is realized or realizable. On October 10, 2022, VPX, along with certain of its domestic subsidiaries and affiliates, filed for protection under Chapter 11 of the bankruptcy code in the Southern District of Florida. VPX initiated the bankruptcy action before the District Court could decide certain remaining issues. At this -- as this litigation and other pending proceedings with VPX are subjudicate, we will not be answering any questions on those matters on today's call. Our first alcohol-based product line to leverage Monster's brand equity is scheduled to launch in the first quarter of 2023. The Beast Unleashed will be a full bodied flavored malt beverage with 6% alcohol by volume and will come in 4 bold flavors, mean green, white haze, peach perfect and scary berries, all of which are based on Monster's well-known and popular flavor profiles. CANarchy Kanok will introduce The Beast Unleashed through certain beer distributors in the United States, utilizing a phased approach launch, with the goal of being national by the end of 2023. Our alcohol innovation pipeline is robust. In addition to The Beast Unleashed, we will relaunch Wild Basin Hard Seltzer with new packaging and great new flavors and taste profiles. The Dale's beer family will get a refresh, including the introduction of Dale's American Light Lager, an easy-drinking lager with 4.2% alcohol by volume, 95 calories and 2.5 carbs per 12-ounce serving. We also have several additional innovative alcohol beverage products under development and look forward to sharing use of those products at a later date. In the U.S., in September, we began shipping Monster Reserve Orange Dreamsicle to distributors for an October launch at retail. We are excited about the planned launch of our new Monster Energy Zero Sugar energy drink initially in the United States at retail in January of 2023. Monster Energy's Zero Sugar was specifically developed as an indistinguishable zero sugar analog of our original unique Monster Energy Green flavor. We are excited about the opportunities that this product will provide to our Monster consumers who have come to enjoy the unique taste profile of our original Monster Green flavor, which remains our leading flavor. We are planning to launch Monster Tour Water in the United States, in still and sparkling variants in 19.2 ounce cans in the first half of 2023. Monster Tour Water is a pure unflavored water product. In the first half of 2023, we are also planning to launch Rainstorm in 4 flavors in 12-ounce slim cans to compete directly with certain competitive new entrants in the energy drink category in the United States. In Puerto Rico, during July, we introduced our first 16-ounce 12-pack ultra variety packs. And in August, we launched Monster Reserve Watermelon and Reserve White Pineapple. In Mexico, we expanded our juice portfolio and launched Monster Juice Monarch in August. We launched Monster Dragon Tea Lemon in August in Honduras and El Salvador, and in September in Guatemala. In Australia, during the month of July, we expanded our Mother portfolio and launched Mother Lava Guava. In EMEA, in the third quarter of 2022, we launched Monster Assault and Monster Reserve White Pineapple in a number of countries. In certain countries, we also launched Juiced Monarch, Juiced Chaotic, Ultra Rosa and Ultra Watermelon during the 2022 third quarter. During the 2022 third quarter, we also launched additional SKUs of Burn, Predator and Rain in certain countries. We are excited about the planned launch at retail of our new Monster Energy Lewis Hamilton Zero Sugar Energy Drink initially in select EMEA markets late in the fourth quarter of 2022, followed by an additional 20 markets in the first quarter of 2023. During the third quarter of 2022, we launched Predator in Kazakhstan, Malaysia and Jordan, and we continued the national rollout of Predator in India. We are planning to introduce the Predator brand in additional countries in APAC in the last quarter of 2022 and the first half of 2023. We also launched Monster Super Cola in a can in Japan in August and Monster Rehab Tea Plus Lemonade in October. We estimate October 2022 sales, including CANarchy to be approximately 6. 5% higher than in October 2021 and 5% higher than in October 2021, excluding CANarchy. On a foreign currency adjusted basis, including CANarchy, October 2022 sales would have been approximately 12. 9% higher than the comparable October 2021 sales, and 11.4% higher than October 2021, excluding CANarchy. October 2022 had the same number of selling days as October 2021. The company had sufficient can capacity and co-manufacturing filling capacity across all regions to address demand for October. We would like to remind listeners that we took a general price increase in the United States effective September 1, 2022. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases, promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. We reiterate that sales over a short period, such as a single month, should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions, our new product innovation launches in those regions could be delayed. Turning briefly to share repurchases. During the 2022 third quarter, the company purchased approximately 3.1 million shares of common stock, and as of November 3, 2022, approximately $182.8 million remained available for repurchase under the June 2022 repurchase program. The Board of Directors also authorized a new share repurchase program for the repurchase of up to an additional $500 million of the company's outstanding common stock. In conclusion, I would like to summarize some recent positive points. One, consumer demand remains solid, even with the pricing actions that have been taken in 2022; two, the company has increased its raw material and finished product inventories to better service its customers and ensure availability of its products; three, our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region; four, we are pleased with the new additions to the Monster Energy portfolio; five, we are particularly excited for the launch of Monster Energy Zero Sugar in January 2023 in the United States. As I mentioned previously, Monster Zero Sugar is an analog of our original unique Monster Energy Green flavor. Six, we are planning to launch rate auto body fuel high-performance energy drinks in additional international markets and countries. We are also pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in an additional number of international countries. We are enthusiastic for the planned launch of The Beast Unleashed, our first flavored malt beverage alcohol product and for the opportunities that the CANarchy acquisition presents. We are also enthusiastic for the planned launches of the Monster Tour Water and Rainstorm lines in the first half of 2023 in the United States. Ten, we believe that we will be able to address many of the challenges we have experienced in our supply chain. Eleven, we consider that certain of the increased costs that we have experienced in the quarter may well be transitory. For example, the LME price for aluminum has reduced materially from its recent March highs, and we are beginning to see a reduction in freight costs as well as reductions in the cost of shipping containers and ocean freight. I would like to now open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] Our first question today comes from Andrea Teixeira from JPMorgan. Andrea Teixeira : I was hoping if you can comment on the October performance, excluding FX in the low double digits, and not to take demerit of it, but just understanding if there is some signs of retailers that may have decided to take inventory down or seeing some less or the timing of pricing? And was this performance pretty much consistent across all channels? Hilton Schlosberg : So Alexander (sic) [Andrea] as we look at where we are on the weekly volume trends, we're really not concerned because the trends that we look at are the Nielsen trends and the depletions. So far, volumes seem to be holding up, and we're satisfied with the performance of the price increase. And as you also know, we reduced our promotions as we went through 2022. So at this time, we are continuing to evaluate performance. It looks as if the price increase is, in fact, sticking. I'm looking at numbers. I'm looking at it on my screen now, the total industry and the various participants in the industry, volumes seem to be holding up. So I think that's the only comment that I'd like to make at this time. Operator: Our next question comes from Dara Mohsenian from Morgan Stanley. Dara Mohsenian : And Hilton, maybe to follow up on that. Can you just talk about what you're seeing internationally in terms of energy category growth. There have obviously been some broader concerns across CPG around macro impacts and weaker consumer spending. And if you could see that impact the consumer broadly and particularly in the energy category? So an update on what you've seen in terms of the category internationally would be helpful. Hilton Schlosberg : Yes. So Dara, I think as we look at the category internationally, EMEA really still looks pretty strong. Remember, at the end of the day, we're sending an affordable luxury. So EMEA, and there are lots of concerns in costs in EMEA, gas prices and not necessarily petrol prices, but energy costs are ramping up significantly in EMEA. We've seen lots of other costs hitting us. But at the end of the day, the consumer still seems to be spending, not at the rates they were spending in 2021, but they still seem to be spending on our products anyway. So we've seen growth in EMEA. As I look at other parts of the world, Japan had an issue with an ingredient that Rodney spoke about in his narrative. And the rest of EMEA -- the rest of Asia Pacific, I'm sorry, seems also to be -- to continuing with growth, although not at the same rate as 2021. And we're monitoring the situation. But right now, volumes still seem to be healthy. Rodney Sacks : The only thing I would add is that we're seeing still a little bit of the effects of COVID in places like China and Japan, wher -- Hilton Schlosberg : In japan, that's correct. Rodney Sacks : A little bit of the volume there. But again, we think that's more COVID-related and that eventually is going to work its way through and then we think things will start to improve again there. Operator: Our next question comes from Bonnie Herzog from Goldman Sachs. Bonnie Herzog: Give us a sense of how much of your volume growth in the quarter was a result of pre-buying ahead of your price increase? Or did you really limit that? And then on your margins, could you give us a sense of how much of the expense of inventory is left and if it will be fully worked through by the end of this year? And then thinking about next year, and I'm well aware you don't guide, but is there any reason to think your gross margins can get back to the mid-50% range early next year, possibly Q1, especially given the pricing. You've already put in the market. You just mentioned it's sticking, and you did just announced some future pricing in international markets. So how should we think about the gross margin recovery? Hilton Schlosberg : Okay. So that was quite a long question, Bonnie. Let's start at the very beginning. You spoke about these more expensive imported cans that we have in the system that we brought in to satisfy demand. If you look at cost of sales in the quarter, what we talk about is not a significant number, but will be worked through as we work through normal inventory, and we're anticipating it will be worked through over probably the next, I would say, 3 quarters. So that is something that we will work through in the ordinary course. The cans of many of green and white that we sell in the ordinary course. We sold them every day. And the comment on this quarter was that we had a major promotion with Apex Legends and its city to produce promotional cans overseas because you don't know when they'll arrive, if they'll arrive on time, if they arrive late. So we stick to our core SKUs for our international cans. So -- and you're right, we have had a price increase, and in the U.S., and we've had price increases internationally, we're having more price increases in 2023, as we enunciated on the discussion earlier. So prices are going up and prices going up in response to the inflationary costs that we've seen. As you know, inflation is rampant. But on the other hand, there are some good things that are coming out. We've seen freight rates coming down. There was a lot of capital expenditure put into new equipment and containers. So we've seen freight rates coming down. Fuel is where fuel is. It's very difficult to say what's going to happen with gas prices and diesel and fuel. Aluminum is coming down, but aluminum is one of those elusive commodities in our business because we -- part of our aluminum is hedged, part is bought on n minus 1. So you don't see a perfect improvement in aluminum prices when you look at a specific quarter. So there's -- we're seeing increases in commodities. We're seeing horrific increases in energy costs in Europe. And there's a bunch of costs that are continuing to compromise progress. But all in all, we believe that the price increases that we are putting into place should be able to be tolerated by the consumer and help mitigate some of the increased costs we've seen. Rodney Sacks : I would perhaps add on that is that, I mean, we all know that the inflation is continuing. I mean, you saw the increase in interest rates today again. So inflation, both in the U.S. and in Europe, is high. And if we continue to see inflation at those rates, I mean, we will review our margins. We'll review pricing, as I'm sure all other consumer product companies have done and will continue to do. And so we will review whether -- going into next year, whether they, in fact, pricing needs is justified in looking at an increase at that time in order to keep our margins reasonable. If we need to do that, we will review it. So just to let you know, we're open to it. But at this stage, we have the current increase, and we'll see how things go. But I think the whole world is going through -- is going to continue for some time to face a lot of inflation. And so whatever we say will be reviewed on a timely basis once we see where we are at, at the beginning of the year. Hilton Schlosberg : And the other comment -- sorry, I just wanted to respond to another comment that Bonnie made about buying. So we restricted customers, obviously, the distributors in buying in. We didn't give them cut launch. They were allowed to buy a modest amount. And as we look at the numbers for the quarter, we believe that the -- that whatever was purchased was probably sold in the quarter. That's the numbers we've seen. Operator: And our next question comes from Kevin Grundy from Jefferies. Kevin Grundy: Just a quick 2-parter, if you'd indulge me. Number one, if you could just confirm that your understanding is still that Red Bull is going to follow the magnitude of the price increase that you took, it's lagging a little bit in the Nielsen data. If you could just confirm that. My broader question is just on the recent distribution changes from some of your competitors with CELSIUS going into the Pepsi system, Bang coming out. Very common for that to create opportunity for incumbents like you guys and Red Bull in this instance. Can you just comment on your observations with respect to the state of those transitions? And how much of that disruption, particularly around Bang, do you think is contributing positively to your market share performance and how sticky that is? Hilton Schlosberg : Okay. Rodney, do you want to start that one? Or do you want me to? Rodney Sacks : Yes. I'll sort of start that one. I think that the CELSIUS transition is -- will be interesting. But it's not all a panacea. It doesn't -- there's no magic in it. We think that they will then find increased distribution and increased number of outlets. I think that the discipline that a system like Pepsi will clearly introduce will also be a little bit negative on the flexibility and that they've been able to achieve or being able to enjoy through the beer distribution network. So you get pluses and minuses. And as you can see from the numbers, their strength continues to be in the grocery and large-format store channel. When you look at their numbers and sales per point in the convenience channel, there -- it's not as high. So I don't -- we don't believe that's going to have a major difference. There are a number of other brands that are all sort of getting some traction at a smaller level. I don't know what effect they're going to have. But overall, I think that we're getting a lot of our traction from the innovation and from execution and focus. And I think that will continue. Hilton Schlosberg : So let me go back to Kevin's question on Red Bull. Kevin, obviously, we can't comment on what they do and what they don't do. But our understanding is they imposed a price increase. And what we're seeing anecdotally is we're not seeing that price increase reflected in many cases at retail, to the extent that the increase was supposed to have have gone up. We, on the other hand, we've seen our prices move up strongly at retail. Operator: And our next question comes from Mark Astrachan from Stifel. Mark Astrachan: I guess just following up on the last question, kind of thinking about shelf placement. So your overall placement has improved. I think you're still a little bit below where you were a couple of years ago, given some of the supply chain challenges. At the same time, you've got lots of innovation, probably more than I think most can remember in at least the last 10 years going into '23. So how do you think about your shelf space on a go-forward basis? Are you putting innovation in place of existing products, are you expanding your footprint on the shelf? And then if you think about the performance in functional category, CELSIUS, C4, GHOST, et cetera, are you seeing placement in the existing energy cooler? Or is that going into new coolers or different places within the existing coolers to a certain extent? Hilton Schlosberg : So let me start off, Mark. Our sales team has an objective because this is the time where we do shelf plans and shelf negotiations. And our sales team, both on the convenience side and on the large store side, are very active in achieving additional shelf space for our brands because we do feel that they are under spaced, and they do deserve further space relative to what's happening in the market. For example, in convenience, we sell more than single-serve sparkling beverages. So as a category, the energy category really requires more space relative to their fair share. And as such, our brand, which is growing, and we mentioned that we've overtaken Red Bull as a company with all -- the various brands and makeup. The company, our mission is to increase our shelf space at retail. I think we have to. Rodney Sacks : I think the other point that what's happening now is you've got this emergence of quite a few new brands who are getting distribution through the beer distribution network taking the place of where CELSIUS is and they're getting it. So we've got quite a few brands now putting pressure on the retailers to give additional space. There isn't additional space in the existing energy door. And what we've been trying for a few years is to obviously try and see where our own performance energy and other sort of allied energy brands are able to create a second door, additional shelving separate. And I think that is going to continue. I think that this emergence of a lot of new products in the convenience category, in particular, will result in an expansion of space where -- so hopefully, we believe we will be able to get additional space in the traditional draw for our innovation and our energy product and as well as space for our additional brands and our performance products like Rain and Rainstorm together with a lot of the other performance or clean energy products in additional doors. So we think that will actually happen and will improve this year. But that's always the challenge. You've always got to try and -- you got a certain amount of fixed shelves and you've got to try and increase your space. Hilton Schlosberg : Yes. But remember, the category is growing here, Mark. And that in and of itself, that's a factor for the retailer. The space that they allocate to energy generates them really good returns, really good revenue. And it's something -- space is something that we always strive for, including putting our own coolers in retailers. So that's a big push for us, and always has been. Operator: Our next question comes from Peter Galbo from Bank of America. Peter Galbo: I'll be pretty quick. Just to clarify, Hilton, your fourth quarter gross margins, you're going to be lapping, I guess, the promo benefit from 3Q, but should we still expect a sequential improvement in the gross margin? Or is that promo benefit you saw in the third quarter enough that you'd be actually down quarter-on-quarter into 4Q? Hilton Schlosberg : The difficulty, Peter, is that we don't give guidance. So it's hard to give guidance because we don't give it. But let me just leave you with a thought when you talk about gross margins that the price increase was effective September 1. So we basically had 1 month of a price increase. We will have 3 months of a price increase in December. While we may have additional costs, we will still have that benefit of the price increase for the fourth quarter. Operator: And at this time, we will conclude today's question-and-answer session. I would like to turn the conference call back over to Mr. Sacks for any closing remarks. Rodney Sacks : 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 continue 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 are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain safe and healthy. Thank you very much for your attendance. Operator: Ladies and gentlemen, the conference has now concluded. We do thank you for joining today's presentation. You may now disconnect your lines.

Operator: Good day to everyone. My name is Devin, and I will be your op -- your conference operator today. At this time, I would like to welcome everyone to the conference call. All lines have been placed on mute to prevent any background. After the speakers’ remarks, there will be a question-and-answer session. Mr. Rodney Sacks, you may begin your conference. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I am Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call, as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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, 2022, including the sections contained therein entitled Risk Factors and Forward-Looking Statements for a discussion on the specific risks and uncertainties that may affect our performance. The company assumes no obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company achieved record second quarter net sales of $1.66 billion in the 2022 second quarter, 13.2% higher than net sales of $1.46 billion in the 2021 comparable period and 16.9% higher on foreign currency adjusted basis. Since the beginning of the COVID-19 pandemic and the subsequent increased demand for the company’s energy drinks, the company prioritized ensuring product availability for its customers and consumers. This strategic direction has remained in place throughout the global supply chain challenges and disruptions despite adversely impacting the company’s profitability. The company continues to stand by its strategy to ensure product availability and solidify the continued long-term growth of the company’s brands. During the 2022 second quarter, the company experienced a significant increase in cost of sales relative to the comparative 2021 second quarter, primarily due to increased freight rates and fuel costs, including costs relating to the importation of aluminum cans, increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, increased aluminum can costs attributable to higher aluminum commodity pricing, geographical and product sales mix and production inefficiencies. The company estimates that of the increase in cost of sales in the 2022 second quarter of $250.3 million, approximately $164.4 million was comprised of; one, approximately $66.7 million due to increased freight rates and fuel costs, including costs relating to the importation of aluminum cans; two, approximately $45.9 million due to increased ingredient and other import costs, including secondary packaging materials and increased co-packing fees; three, approximately $27.5 million due to increased aluminum can costs attributable to higher aluminum commodity pricing; four, approximately $15.1 million due to geographical and product sales mix; and five, approximately $9.2 million due to production inefficiencies. The company continued to experience additional global supply chain challenges, including the lack of adequate shipping containers and port congestion, which resulted in shortages of certain ingredients and finished products. As a result, the company continued to air freight substantial quantities of certain ingredients internationally, particularly to EMEA, Asia-Pacific and Latin America at additional costs and inefficiencies. Furthermore, the company experienced significant increases in distribution expenses, including increased fuel, freight and warehousing costs, which adversely impacted operating expenses. The company continued to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. Gross profit as a percentage of net sales for the 2022 second quarter was 47.1%, compared to 57.2% in the 2021 second quarter. The decrease in gross profit as a percentage of net sales for the 2022 second quarter was partially offset by pricing actions. Operating expenses for the 2022 second quarter were $406. 9 million, compared with $310.9 million in the 2021 second quarter. The comparative operating expenses for the 2021 second quarter included a $16.9 million reversal of amounts previously accrued in connection with an intellectual property claim. As a percentage of net sales, operating expenses for the 2022 second quarter were 24.6%, compared with 21.3% in the 2021 second quarter and 25.6% in the 2019 second quarter pre-COVID. Distribution expenses for the 2022 second quarter increased to $87.9 million, which is an increase of 36% or 5.3% of net sales, compared to $64.6 million or 4.4% of net sales in the 2021 second quarter and 3.4% of net sales in the 2019 second quarter pre-COVID. The $23.3 million increase in distribution expenses was primarily due to increased freight out expenses of $13.5 million as a result of higher outbound freight rates and fuel, increased volume and out-of-orbit freight, as well as higher warehouse expenses of $9.7 million as a result of higher raw material and finished product inventories in the United States and EMEA. The increase in other operating expenses was primarily due to increased payroll expenses, increased expenditures for sponsorships and endorsements, and increased expenditures for travel and entertainment. Certain of these increases were the result of the company’s return to activities consistent with pre-COVID-19 levels. We have decreased our reliance on imported cans and are currently purchasing aluminum cans from local sources in both the U.S. and EMEA. We anticipate seeing a reduction in cost of sales through increased use of domestic cans as we cycle through existing inventories of imported cans over the next few quarters. We rebuilt and increased finished product inventory levels across the United States and EMEA to reduce the excessive cost of long distance freight to satisfy demand and to return to our orbit strategy of producing in closer proximity to our customers. The cost of repositioning finished products to distribution centers are included in freight-in costs. Operating income for the 2022 second quarter decreased 29.1% to $373.0 million from $526 million in the 2021 comparative quarter. Net income decreased 32.3% to $273.4 million, as compared to $403.8 million in the 2021 comparable quarter. Diluted earnings per share for the 2022 second quarter decreased 32.2% to $0.51 from $0.75 in the second quarter of 2021. Through pricing actions, the company was able to achieve positive pricing appreciation in the United States and in EMEA. Due to continued cost pressures, the company is implementing a net sales price increase in the range of 6% market wide in the United States effective September 1, 2022. The company will also be implementing price increases in the second half of 2022 in certain international markets, some in addition to price increases or pricing actions taken earlier this year in order to mitigate inflationary cost pressures. According to the Nielsen reports, for the 13 weeks through July 23, 2022, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 8.2% versus the same period a year ago. Sales of the company’s energy brands including Reign were up 6% in the 13-week period, sales of Monster were up 7. 4%, sales of Reign were down 5.6%, sales of NOS decreased 3.9% and sales of Full Throttle decreased 0.8%. Sales of Red Bull increased 3.8%, sales of Rockstar increased by 2.1% and sales of 5-Hour decreased 3%. VPX Bang’s sales decreased 14.5%. The sales growth of the Monster brand exceeded that Red Bull in the period. According to Nielsen for the four weeks ended July 23, 2022, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars increased 6.6% over the same period the previous year. Sales of the company’s energy brands, which include Reign, increased 5.6% in the four-week period in the convenience and gas channel, sales of Monster increased by 6.4% over the same period versus the previous year, Reign sales increased 0.9%, NOS was down 1.8% and Full Throttle was down 2.5%. Sales of Red Bull were up 3.9%, Rockstar was down 1.8% and 5-Hour down 3.5%. VPX Bang sales decreased 16.3%. According to Nielsen for the four weeks ended July 23, 2022, the company’s market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased 0.4 point to 36.1%. Monster share decreased from 30.6% a year ago to 30.5%, Reign share decreased 0.1 of a share point to 2.3%, NOS share decreased 0.2 point to 2.5% and Full Throttle share remained at 0.7%. Red Bull share decreased one percentage point from 37.4% a year ago to 36.4%, Rockstar share was down 0.3 point to 3.5%, 5-Hour share was lower by 0.4 at 4.2% and VPX Bang share decreased 1.6 points to 6%. According to Nielsen for the four weeks ended July 23, 2022, sales in dollars of the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased 4.4% over the same period the previous year. Sales of Java Monster, including Java Monster 300 and Java Monster Nitro Cold Brew were 2.3% higher in the same period versus the previous year. Sales of Starbucks Energy were 9.4% higher. Java Monster share, including Java Monster 300 and Java Monster Nitro Cold Brew of the coffee plus energy category, which primarily includes Java Monster, Java Monster 300, Java Monster Nitro Cold Brew, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee for the four weeks ended July 23, 2022 was 50.9%, down 1 point, while Starbucks Energy share was 47.7%, up 2.2 points. According to Nielsen in all measured channels in Canada, for the 12 weeks ended June 18, 2022, the energy drink category increased 12.8% in dollars. Sales of the company’s energy drink brands increased 8.5% versus a year ago. The market share of the company’s energy drink brands was 40%, down 1.6 points. Monster sales increased 10.8% and its market share decreased 0.7 point to 34.8%. NOS’ sales decreased 9.6% and its market share decreased 0.4 to 1.5%. Full Throttle sales increased 13% and its market share remained at 0.6%. According to Nielsen for all outlets combined in Mexico, the energy drink category increased 21.2% for the month of June 2022. Monster sales increased 26.9%. Monster’s market share in value increased 1.3 points to 28.4% against the comparable period the previous year. Sales of Predator increased 53.1% and its market share increased 0.8 of a share point to 4%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen for the month of June 2022, compared to June 2021, Monster’s retail market share in value increased in Argentina from 46.9% to 49.2%. Monster Energy continues to be the leading brand in value in Argentina. According to Nielsen for the month of June 2022 compared to June 2021, Monster’s retail market share in value increased in Brazil from 35.7% to 39.9%. Monster is now the leading energy brand in value in Brazil, marking another important milestone for our brand in South America. In Chile, Monster’s retail share for the month of June 2022 decreased from 41.9% to 38.1% due to a shortage of shipping containers. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen in the 13-week period ending July 17, 2022, Monster’s retail market share in value as compared to the same period the previous year, grew from 25.8% to 31.6% in France from 27.8% to 32.1% in Norway and from 37.6% to 39.7% in Spain. According to Nielsen in the 13-week period until the end of June 2022, Monster’s retail market share in value as compared to the same period the previous year grew from 15.3% to 16% in Belgium, from 15. 1% to 15.4% in Germany, from 28.9% to 29.9% in Great Britain and from 19.4% to 19.8% in Poland. Monster’s retail market share in value as compared to the same period the previous year declined from 20.5% to 20% in South Africa. According to Nielsen in the 13-week period ended June 19, 2022, Monster’s retail market share in value as compared to the same period the previous year, grew from 14.5% to 15.6% in Sweden, Monster’s retail market share in value compared to the same period the previous year declined from 8.5% to 6.6% in the Netherlands and from 29.3% to 28.1% in the Republic of Ireland. According to Nielsen in the 13-week period until the end of May 2022, Monster’s retail market share in value as compared to the same period the previous year grew from 15% to 17.5% in the Czech Republic and from 37.9% to 38.7% in Greece. Monster’s retail market share in value as compared to the same period the previous year declined from 30.1% to 28.3% in Italy. According to Nielsen in the 13-ewek period ending May 22, 2022, Monster’s retail market share in value as compared to the same period the previous year grew from 25.7% to 27.5% in Denmark. According to Nielsen in the 13-week period until the end of May 2022, Predator’s retail market share in value as compared to the same period the previous year grew from 17.1% to 26.8% in Kenya and from 8.1% to 15.4% in Nigeria. According to IRI in Australia, Monster’s market share in value for the month ending July 3, 2022, increased from 13.2% to 14.2% as compared to the same period the previous year. Mother’s market share in value decreased from 11.5% to 10.2% during the same period. The market share of the company’s brands in Australia for the month ended July 3, 2022, decreased from 24.7% to 24.5%. According to IRI in New Zealand, Monster’s market share in value for the four weeks ended July 10, 2022, increased from 12.4% to 12.6% as compared to the same period the previous year. LIVE+’s market share in value decreased from 6.9% to 6.5% and Mother’s market share in value decreased from 6.3% to 5.3%. The market share of the company’s brands in New Zealand for the four weeks ended July 10, 2022, decreased from 25.6% to 24.5%. According to INTAGE in Japan, in the month ending June 2022, Monster’s market share in value in the convenience store channel as compared to the same period the previous year grew from 50.6% to 56.7%. According to Nielsen, in South Korea, in the last month ending June 2022, Monster’s market share in value in all outlets combined as compared to the same period the previous year decreased from 61. 9% to 59.9%. We again point out that certain market statistics that single months or four-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $649 million, 39.2% of total net sales in the 2022 second quarter, compared to $546.3 million or 37.4% of total net sales in the corresponding quarter in 2021. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $53.4 million in the 2022 second quarter. Included in reported geographic sales are our sales to the company’s military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2022 second quarter increased 13.8% in dollars and increased 26.8% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales for the second quarter was 26.7%, compared to 39.8% in the same quarter in 2021. Gross profit in the second quarter was impacted by increased freight for imported cans, increased raw material and ingredient costs and increased co-packing fees, higher aluminum commodity pricing and air freight costs. In local currencies, gross profit as a percentage of net sales for the quarter was 27.1%. The company is continuing to address the controllable challenges in its supply chain in EMEA. We are also pleased that in the 2022 second quarter, Monster gained market share in Belgium, Czech Republic, Denmark, France, Germany, Great Britain, Greece, Norway, Poland, Spain and Sweden. In Asia-Pacific, net sales in the 2022 second quarter decreased 1.1% in dollars and increased 8.2% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales was 40.4% versus 44.4% over the same period in 2021. In Japan, net sales in the 2022 second quarter decreased 9.6% in dollars and increased 3.3% in local currency. Sales performance for the comparable period in 2021 was largely impacted due to COVID-19 restrictions in Japan. In South Korea, net sales decreased 5.2% in dollars and increased 3.8% in local currency as compared to the same quarter in 2021. Monster remains the market leader in Japan and South Korea. In China, net sales decreased 2.1% in dollars and 8% in local currency as compared to the same quarter in 2021, largely impacted by COVID-related lockdowns. We remain optimistic about the prospects for the Monster brand in China. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam, net sales increased 1.3% in dollars and 7.6% in local currencies. Sales in Australia and New Zealand were negatively impacted by shipping delays of certain flavors, concentrates and ingredients. Furthermore, sales in Australia were also impacted by severe flooding in that country in the 2022 second quarter. In Latin America, including Mexico and the Caribbean, net sales in the 2022 second quarter increased 66.7% in dollars and increased 69.7% in local currencies over the same period in 2021. Gross profit in this region as a percentage of net sales was 36.4% for the 2022 second quarter versus 40.7% in the 2021 second quarter. In Brazil, net sales in the 2022 second quarter increased by 8.8% in dollars and 63.9% in local currency. Net sales in Mexico increased 49.3% in dollars and 49% in local currency in the 2022 second quarter. Net sales in Chile increased 26.1% in dollars and 45.3% in local currency in the 2022 second quarter. Net sales in Argentina increased 200.1% in dollars and 26 9.4% in local currency in the 2022 second quarter. I will now provide the most recent update on our litigation with Vital Pharmaceuticals, Inc., which I will refer to as VPX, the maker of Bang energy drinks. In June 2020, Monster Energy Company, which I will refer to as MEC and Orange Bang, Inc., a family-owned beverage business and the rightful owner of several trademark registrations to the Bang marks initiated an arbitration against VPX. MEC and Orange Bang alleged that VPX breached a 2010 settlement agreement with Orange Bang that restricted VPX’s use of the Bang trademark to products that are creatine-based or marketed and sold only in nutritional channels, as well as claims that VPX infringed Orange Bang’s trademark rights to the Bang marks. In April 2022, the arbitrator issued a final award finding in favor of MEC and Orange Bang on all claims. The arbitrator awarded MEC and Orange Bang $175 million to remedy VPX’s past misconduct, as well as attorneys’ fees and costs, which amounted to nearly $9.3 million. The arbitrator also ordered VPX to pay MEC and Orange Bang an ongoing 5% royalty on all future sales of VPX Bang’s energy drinks and other Bang branded products. Pursuant to the terms of the agreement between MEC and Orange Bang, the award and future royalties will be shared equally between MEC and Orange Bang. On July 1, 2022, the United States District Court for the Central District of California granted MEC and Orange Bang’s motion to confirm the arbitrator’s award and denied VPX’s motion to vacate the arbitrator’s award. MEC and Orange Bang have requested that the court end to final judgment. On July 28, 2022, VPX filed a notice of appeal to the United States Court of Appeals for the non-circuit. The company will not recognize the award or royalties until such time as they are realized or realizable. Yesterday, the United States Court of Appeals for the 11th Circuit issued a ruling affirming the decision of the United States District Court in the Southern District of Florida, in which the District Court rejected VPX’s claim that MEC’s line of Reign energy drinks infringed the trade rest of its line of Bang energy drinks. MEC’s lawsuit against VPX for force advertising, unfair competition and misappropriation of trade secrets in the Central District of California is still pending with trial scheduled to begin later this month. As this litigation and other pending proceedings with VPX are subdued, I will not be answering any questions on those matters on today’s call. The first alcohol-based product line that we plan to launch since the acquisition of CANarchy will be a full bodied flavored malt beverage that will be launched late in the 2022 fourth quarter under the brand name the Beast Unleashed. Beast Unleashed will leverage Monster’s brand equity, while carving out its own unique space in the beverage alcohol sector and will be distinguishable from the many hard seltzer brands that have become so ubiquitous over the last several years. The Beast Unleashed will have a 6% alcohol content by volume and will come in four great tasting bold flavors, which are based on certain of Monster’s well-known and popular flavor profiles. Beast Unleashed will be launched through beer distributors in the United States, utilizing a phased state launch approach, with the goal of being national by the end of 2023 and will initially be offered in 16-ounce single-serve cans, as well as a 12-can variety pack in 12-ounce sleek cans. Our alcohol innovation pipeline is robust, with a number of additional innovative product lines currently under development. We look forward to sharing use of such additional alcohol beverage products at a later date. We are excited about the planned launch of our new Monster Energy Zero Sugar energy drink in the 2022 fourth quarter initially in the United States. Monster Energy Zero Sugar was specifically developed as an indistinguishable Zero Sugar analog of our original unique Monster Energy Green flavor. We are excited about the opportunity that this product will provide to our Monster consumers who have come to enjoy the unique taste profile of our original Monster Green flavor, which remains our leading flavor. In April of 2022, we launched Pure North Energy Seltzers in sleek 355 ml cans in three flavors Cucumber Lime, Black Cherry and Grape fruit Lemonade in Canada. At the end of June 2022, we expanded our core Monster Energy portfolio in Canada by launching Monster Reserve in two flavors, Watermelon and White Pineapple, both in 473 ml cans. In Latin America, we introduced several new energy drinks in our Monster Energy Predator and Fury product lines in certain Latin American countries in the 2022 second quarter. In April 2022 in New Zealand, we launched LIVE+ Watermelon, our fourth LIVE+ flavor. In EMEA, in the second quarter of 2022, we launched Monster Nitro and Monster Assault in a number of countries. In certain countries, we also launched Juiced Monarch and Chaotic during the 2022 second quarter. During the 2022 second quarter, we also launched additional SKUs of Burn, Relentless, Nalu and Reign in certain countries. During the second quarter of 2022, we launched Predator in Turkey and we continued the national rollout of Predator in India and Vietnam in June, expanding the brand to East India and North Vietnam. We also launched Predator in Cambodia in July 2022. We are planning to introduce the Predator brand in several additional countries in APAC in the second half of 2022. In Japan, we launched Monster Super Fuel Killer Kiwi and Monster Energy Ultra Sunrise in China. We estimate July 2022 sales, including to be CANarchy to be approximately 12.9% higher than in July 2021 and 11.2% higher than in July 2021 excluding CANarchy. On a foreign currency adjusted basis, excluding CANarchy, July 2022 sales would have been approximately 16.6% higher than the comparable July 2021 sales. July 2022 has had one less selling day compared to July 2021. The company had sufficient can capacity and co-manufacturing facility -- capacity across all regions to address demand for July. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors, such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases, and promotions in retail stores, distributor incentives, as well as shifts in the timing of production in some instances where our bottlers are responsible for production and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers, as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue, in certain regions our new product innovation launches in those regions could be delayed. In conclusion, I would like to summarize some recent positive points. One, the company is increasing its raw material and finished product inventories to better service its customers and ensure availability of its products. Two, our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. Three, we are pleased with the new additions to the Monster Energy portfolio. Four, we are planning to continue additional launches of our Reign Total Body Fuel high-performance energy drinks in additional international countries. Five, we are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in an additional number of international countries. Six, we are enthusiastic for the planned launch of the Beast Unleased, our first flavored malt beverage alcohol product and for the opportunity that the CANarchy acquisition presents. Seven, we believe that we will be able to address many of the challenges we have experienced in our supply chain. Eight, we consider that certain of the increased costs we have experienced in the quarter may well be transitory. For example, the current cost of aluminum has reduced materially from its recent March highs and we are beginning to see a reduction in fuel and freight costs, as well as reductions in the cost of shipping containers and ocean freight. I would like to now open the floor to questions about the quarter. Thank you. Operator: Our first question will come from the line of Bonnie Herzog with Goldman Sachs. Bonnie Herzog: Hi. Thanks. Hi. Operator: Your line is now open. Bonnie Herzog: Okay. Thank you. I guess a question on gross margins. I simply don’t understand really why they were the bad in the quarter. I guess I was under the impression that you were already buying a fair amount of your aluminum cans from U.S., and therefore, should have been less reliant on the importation of cans, I guess, at least in the U.S. So, I thought that was the plan. However, I do see your inventory levels in the quarter went even higher and are almost three times the level they were last year. So, I guess, help us understand that and just trying to think through, is this really the right way to manage the business? And then, Hilton, you mentioned these pressures are transitory or it was in the release, but I guess, they are not really feeling like it. So when do you guys expect to be 100% buying in the U.S. and EMEA for your supply, and really no longer importing aluminum cans? Hilton Schlosberg: Sure. Bonnie, thank you for that question. I think a lot of people probably may want to ask the same question. So thanks for addressing it early on. We have always taken a stance that objective is to support our customers and our consumers. We went through entire times in 2020 and 2021 when we did not have enough capacity to service our customers and our consumers. We had bottler screaming. We had retailer screaming, and at the time, we made a very conscious effort that we were going to import cans at expensive costs, not in terms of the actual cost of the can, but the cost of importing a cans, the container costs, the marriage, the which you guys call the merge, just everything relating to the importation of aluminum cans. So that was an absolute conscious decision. As cans started arriving late in 2021, EMEA was the most affected. I think we have had a number of discussions about how EMEA was affected and a substantial number of those cans went into EMEA and have been consumed over a period of time. It’s difficult with our business because we have promotions from time-to-time. For example, we have got the Apex Legends promotions now and the cans that come in are not promotional cans. So, they are using production when there’s market and market demand. So, in EMEA, we stopped importing cans. We thought we would still have to import cans during 2022. We stopped that and there’s no longer importation of cans into EMEA in 2022. In 2021, we have had coming in the U.S. and we will soon be out of those cans as soon as we get over this Apex Legends promotion. But in the U.S., the percentage of imported cans in our furnish is very low compared to what it was in the second quarter in EMEA. So, I hope that answers your question. We did it as a conscious effort to support and to supply our customers because we are in this business for the long-term. We are not in this business for the second quarter of 2022. We are in this business for the long-term and it’s important to us to ensure that our customers and our consumers continue to have energy products. Operator: Your next question. Hilton Schlosberg: So is there anything else that I didn’t answer that or I should have answered, Bonnie? Bonnie Herzog: But, I guess, for me, it’s still back the question as you are making this conscious decision to keep have a bigger supply of cans and have elevated inventory. How do we think about that as I assume you are going to work down that inventory now? Is that starting to happen or will happen in Q3 and Q4, and I assume it’s very elevated cost. So do we think about these pressures on your gross margin, quite frankly, very much continuing Q3 and Q4, is that right about the product? Hilton Schlosberg: No. As I -- yeah. Okay. Great question. As we look at the future, I mean, that in cost of sales, fuel is coming down, we know that. We know that freight is coming down. We are in that every day of our lives. We know that ocean freight is coming down. We know that we have been able now to really diminish the amount of materials that we having to airfreight to keep the wheels moving with product that’s coming out of the U.S. with concentrates. We know that AFF is producing and up and running in Ireland. We know that the percentage of aluminum cans is coming down. We know that aluminum costs are coming down. Aluminum reached a peak -- see if I can find it just very quickly. The maximum level of aluminum, including the Midwest premium was 1.8073 in March -- on March 7th. We buy where we are not hedged -- the portion that’s not hedged is bought at M minus 1. So, the March cans, so the April cans would be based on March pricing. So and we know that aluminum today including, let me find that, including the Midwest premium is 1.36. So, it’s come down from a peak of 1.81 to 1.36. So we know that’s a fact, right? We also know that we built up inventories, which we had to because there’s inventories we were talking about in 2021 were just not sustainable. They were just not sustainable. So we built up inventories and we are now able to avoid a lot of the shipping, the freight that’s been out of orbit. So you add all of that together and we don’t give forecast. I don’t want to start giving forecast. But it’s very clear that 2022, the second quarter, as in fact, we had anticipated would probably be our worst quarter in terms of margin. But I just want to stress again that we are in business for the long-term and we are supporting our customers and our business in the long-term. Operator: Your next question comes from the line of Andrea Teixeira with JPMorgan. Andrea Teixeira: Hi. Good afternoon. Thank you. On the same topic and I tried to do the phasing of the cost pressures and the pricing, would you say pricing both domestic, international would be by that mid single-digit and could probably cover about a third of this $250 million that you quoted? And then you have, of course, and I appreciate the breakdown that you gave, you can phase out some of this higher cost for aluminum, also the $67 million that you said to bring cans imported. So would you end up to about from the $250 million to about $100 million to $150 million in pressures into the fourth quarter, I want to check that? And then on the Monster Zero Sugar, congrats on that, should we think like we obviously have seen Coke Zero Sugar recruit new customer -- new consumers into the category, are you thinking how incremental that could be against Ultra? I am assuming, as Rodney said, it attracts the need state for the typical Monster consumer, because of the taste profile, and also because of the packaging and some more masculine and more into the core consumer, is that fair? Do you have the shelves coming in, how much support you believe you can give to the launch? Thank you. Hilton Schlosberg: Okay. So those were two questions all in. I will start with the first one. So we don’t give guidance and what I have tried to do on this call is give some direction. That’s what we are saying -- that’s what we are seeing is coming down. It’s not going to happen overnight, because there are costs in the system that will take their time to work through. So, in principle as, since we don’t give guidance, I have given some general direction, which I hope you will find helpful and the other analysts will find helpful in analyzing where we go from here. But I just want to repeat yet again that we are in this business for the long-term. We are in this business to support our customers. And yes, maybe we did take a hiccup in gross margin in 2022 -- the second quarter of 2022, but there have been a lot of other cost pressures, including imported cans, imported cans being one of them, but at least we were able to bring our inventories back to a situation where we are able to service customers and we are able to service consumers. Look, it will be a terrible situation, when our price goes up in September 1 and we don’t have sufficient inventories to satisfy demand. I mean, that would just be the end. So we have done our very best to stay on track and to work within a very, very difficult supply chain environment. Rodney Sacks: Perhaps. Thanks. Hilton, I could address the second part on the actual Zero Sugar. I think that we have hedge Zero sugar products. We have the full Ultra line. We have low carb and absolutely zero. But none of them have been really an analog of our original Monster Green. The original Monster Green flavor, which we have had now for over 20 years is still our leading product pretty much in every the world. Consumers do want a choice, and as consumers, I think, get a little older, they do start looking to -- for a sugar -- zero sugar or sugar-free alternative, but we would obviously like to stay in the same franchise with the same product, with the same personality. It’s in a black can with a sort of green claw. And so we feel there is a way to, A, increase the franchise to bring additional consumers who really want that original Monster flavor, but in a Zero Sugar and also to retain and broaden our existing consumer base, as we bring younger consumers in, they tend to not be as worried or concerned about the sugar content. As you get a little older, I think, sugar content does become an issue. There are also in many countries around the world, they have started to tax products with sugar, have label requirements. So we think that by having an offering our original green Monster in a sugar-free -- a zero-sugar version with a very similar can, it’s distinguishable, but very similar with, as I said, it still has the same personality and image. We believe we will further entrench our consumer base and expand it for many years to come. So, we think this is a very important development and an important way we can continue to solidify and make Monster and keep it unique because the Monster flavor is its own unique flavor that is so popular and we would like to continue to expand on it and build on it. So, the plans are to obviously roll this out after the U.S. very extensively. Operator: Your next question comes from Mark Astrachan. Mark Astrachan: Yes. Hey. Good afternoon, guys. I guess I am going to ask one question in two parts, but I swear it’s related. So, the first one, Hilton, I mean, obviously, I get everybody gets what you are saying about guidance, what you think about cost pressures. I just think it would be immensely helpful based on just the commentary that I have been getting from folks or feedback from your shareholders. If you could at least just directionally confirm the gross margins should get better from here and if you could give a sort of magnitude around it, I think it would be helpful. But the related and more serious question is, you have a lot of volatility historically in gross margin, and I have asked this question before, but I am curious, given the current environment, how you think about whether you want to do more with the Coke system from a procurement standpoint, potentially manufacturing through their co-packers in the U.S. or their bottlers in the U.S.? And has there been any sort of change in how you might be thinking about that, given, obviously, what’s happened over the last, call it, 12 months where you would have less to worry about, I suppose, if you are working with them more closely? Hilton Schlosberg: Yeah. So, with regard to your first point, I think I have already answered that. I believe that the second quarter is probably -- we are probably going to see the lowest margin in the year. And as regards better direction than that, Mark, we just don’t do it. We just don’t give guidance. So, that’s the first point. And then on the second point is, we are really not sure and we have had discussions with our distribution partner on a number of issues. And we are not sure that further engagement with them on any of these topics would be positive, but -- positive in terms of lowering cost of sales. But we are continuing to have those discussions and if it makes sense, then definitely we will -- we definitely will. I don’t want to disclose too much, but one of our partners in Europe, that is actually part of the Coca-Cola system, did not fare better in procuring cans than we were able to. So I just want to just put all of this in perspective that it’s not necessarily a panacea. Operator: Your next question comes from Peter Grom with UBS. Peter Grom: Hey. Good afternoon, everyone. Hope you are doing well. I guess I will ask about topline I guess. So, Rodney, Hilton, I guess, I just wanted to ask about Bang, like what are you seeing there in terms of shelf space and kind of what do you expect as they kind of transition to distributors? And I guess, do you see a potential opportunity for you to capture some of that incremental shelf space? Hilton Schlosberg: I think generally in transitions… Rodney Sacks: Yeah. Hilton Schlosberg: … there’s always upheavals, okay. IT’S transitions never happen cleanly overnight. There’s always upheavals. And remember, that Bang is in a lot of the Pepsi shelf space and a lot of the Pepsi Cos and despite that you guys have seen their shares decrease over the last 24 months or so. So I don’t want to say any more than that. I am not sure if Rodney wants to say anymore, but I would say that, obviously, we continue to grow up as much shelf space as we can. We contract for a lot of our own shelf space and we work with the Coke bottlers and then, on the other hand, we work in with the Pepsi space and with the Pepsi coolers. Rodney Sacks: Yeah. Just to bullet lightly. I mean, the -- if Bang transitions out of the Pepsi coolers, you have obviously all aware of the announcement that Celsius who’s been trying to secure and has been securing additional shelf space, we will go into the Pepsi system. So there will be a lot of fighting going on. There’s the Ghost brand lining you to a lesser degree and C4. So you have got all of these sort of performance brands basically fighting for some more shelf space, and obviously, we will do the same. So there will be a lot of transition going on and we believe that we are obviously focused on that as well and our own brands and increasing our own shelf space. Operator: Your next question comes from Kaumil Gajrawala with Credit Suisse. Kaumil Gajrawala: Hi guys. One of the things we have been watching care… Hilton Schlosberg: Hi, Kaumil. Kaumil Gajrawala: Hey. Hi, Hilton. We have been watching carefully about the impact on inflation on the consumer with gas prices and stuff. It doesn’t seem like we have seen a slowdown at all. I am curious which you are observing and maybe if you have done any test in markets like maybe Midland, Texas or Phoenix, or some of those markets where inflation is much higher than it has been nationally if you are perhaps seeing different trends? Hilton Schlosberg: So what I’d like to comment on is, one, retailer and I am not going to mention who they are in terms of their own schematics and their own structures, went early on the price increase. They rolled out early and not only with us but with the competition as well and they have seen no reduction in sales based on that action. So what we are seeing anecdotally is a continuation of the growth in the category. Yes, it has slowed somewhat, but look in Europe, where the categories are a lot older. The growth has been escalating there faster than in the U.S. So we have seen that and now we are seeing the other concern may be abating everyone is asking questions about gas prices and well gas prices affect the consumption of energy drinks, and frankly, we said at the time that when we have seen high gas prices a portion that hadn’t affected the sale of energy drinks and we are seeing gas prices now coming down slowly, but truly they are coming down. So I think that maybe answers your question as well. Operator: And our final question for today’s Q&A will come from Charlie Higgs with Redburn. Charlie Higgs: Hi, Hilton, Rodney. Thanks for the question. Hilton Schlosberg: Hi, Charlie. Totally fine. Charlie Higgs: Hi. I was wondering if you could talk a bit about the price increases you put through in your international markets and what the response is there. And maybe if you could just touch on the scope of the price increases you are planning for in H2 2022, maybe just some information on what countries and what products would be very useful please? Hilton Schlosberg: Yeah. There’s a range of countries that we took prices in the first half of 2022, either directly in price increases or through a reduction in promotions. And we see an uplift effecting the quarter already of the impact of those price increases. As regards the second six months, there’s really a list of countries and I don’t think we have got the time to go through them now, but there’s a list of countries where we will be taking further price increases where we can. For example, in France, you cannot, if you have gone -- if you have had one price increase in a year, you cannot go with the second price increase. So, there’s a range of different countries where we will be taking price increases. Brazil, we took price increases earlier this year. Chile, we took a price increase earlier this year. So we have been doing this on a consistent basis, not to profiteer from inflation, but really to mitigate the whole cost in the system has -- you guys will appreciate. Rodney Sacks: 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 are well-positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you will stay safe and healthy. Thank you very much for your attendance. Operator: This concludes Monster Beverage second quarter 2022 conference call. Thank you for attending today’s presentation. You may now disconnect.

Operator: Good day, and welcome to the Monster Beverage Company First Quarter 2022 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rodney Sacks and Hilton Schlosberg. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Thomas Kelly: Now 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 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, 2022, including the sections contained therein, Risk Factors and Forward-looking Statements, for a discussion on specific risks and uncertainties that may affect our performance. The company assumes no obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you. The company achieved record first quarter net sales of $1.52 billion in the 2022 first quarter, 22.1% higher than net sales of $1.24 billion in the 2021 comparable period. As in recent quarters, to meet increased demand for our products, rather than experience out of stocks for certain lines at retail, the company incurred operational inefficiencies in the United States and in various countries, resulting in increased costs. During the 2022 first quarter, the company continued to procure additional quantities of aluminum cans from suppliers in the United States and abroad in response to increased consumer demand. In the first quarter of 2022, the company experienced significant increases in cost of sales relative to the comparative 2021 first quarter, primarily due to increased freight rates and fuel costs, including costs relating to the importation of aluminum cans, as well as aluminum can costs attributable to higher aluminum commodity pricing. The company also experienced a significant increase in ingredient and other input costs, secondary packaging materials, co-packing fees and production inefficiencies. The company continued to experience additional global supply chain challenges, including the lack of adequate shipping containers and port congestion, which resulted in shortages of certain ingredients and finished products. This necessitated the company air freighting substantial quantities of certain ingredients internationally, particularly to EMEA, Asia Pacific and Latin America at additional costs and inefficiencies. Furthermore, the company experienced significant increases in distribution expenses, including increased fuel, freight and warehousing costs, which adversely impacted operating expenses. The company continued to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. In the United States, the company secured additional co-packing capacity to meet increased demand for certain of its products. The company estimates that approximately $46 million of costs in the quarter were the result of operating inefficiencies due in part to strong consumer demand, including the importation of aluminum cans, as well as COVID-19-related issues such as port congestion, shortage of shipping containers resulting in the need to airfreight ingredients, which the company continues to address. In addition, increased commodity and raw materials costs, including aluminum, other ingredient costs and secondary packaging incurred during the quarter, amounted to approximately $45 million, and increases in freight rates and fuel impacted gross profits by approximately $6 million. Gross profit, as a percentage of net sales, for the 2022 first quarter was 51.1% compared with 57.5% in the 2021 frist quarter. The decrease in gross profit percentage for the 2022 first quarter was primarily the result of the items mentioned previously as well as geographical sales mix. Additionally, [ Drop ] requires a first value step-up of the CANarchy inventories of $3.8 million, which together with expenses related to the acquisition of CANarchy of $4.2 million during the quarter, adversely affected both gross margins and operating expenses. The decrease in gross profit as a percentage of net sales for the 2022 first quarter was partially offset by pricing actions. Operating expenses for the 2022 first quarter was $377.2 million, compared with $300.8 million in the 2021 first quarter. As a percentage of net sales, operating expenses for the 2022 first quarter were 24.8% compared with 24.2% in the 2021 first quarter. Distribution expenses for the 2022 first quarter increased to $81.4 million, which is an increase of 49.7% or 5.4% of net sales compared to $54.4 million or 4.4% of net sales in the 2021 first quarter. The $27 million increase in distribution expenses was primarily due to increased freight out costs of $20.6 million as a result of higher outbound freight rates and fuel, increased volume and out-of-orbit freight, as well as higher warehouse expenses of $6.4 million as a result of higher raw material and finished good product inventories in the United States and EMEA. We believe that a portion of the increase in distribution expenses that we experienced in the quarter are likely to be transitory. The increase in other operating expenses was primarily due to increased expenditures for travel and entertainment, increased payroll expenses, increased professional services expenses, including accounting and legal expenses, increased commissions and increased sponsorships and endorsements. During the comparative 2021 first quarter, the company decreased expenditures for travel and entertainment as well as our marketing programs largely as a consequence of the COVID-19 pandemic. The impact of the COVID-19 pandemic was less pronounced on such expenses during the 2022 first quarter. Operating expenses as a percentage of net sales for the 2022 first quarter were 24.8% as compared to operating expenses as a percentage of net sales for the 2019 first quarter pre-COVID, which was 27.7%. Our 2 new suppliers of aluminum cans in the United States are now operational. And as a result, we are able to decrease our reliance on the use of imported aluminum cans in the United States. In the United States, we anticipate seeing a reduction in cost of sales related to the use of imported aluminum cans in the latter half of 2022. Although, we expect to reduce the importation of aluminum cans into EMEA in the second half of 2022, we will only see a reduction in cost of sales after we have worked through current inventories of imported cans in EMEA. We rebuilt and increased finished product inventory levels across the United States and EMEA to reduce excessive cost of long-distance freight to satisfy demand and to return to our orbit strategy of producing in closer proximity to our customers. The cost of repositioning finished products to distribution centers are included in freight-in cost. Operational income -- sorry, operating income for the 2022 first quarter decreased 3.5% to $399.5 million from $414.1 million in the 2021 comparative quarter, primarily due to the company's operations in EMEA and Asia Pacific. Net income decreased 6.7% to $294.2 million as compared to $315.2 million in the 2021 comparable quarter. Diluted earnings per share for the 2022 first quarter decreased 6.8% to $0.55 from $0.59 in the first quarter of 2021. Through pricing actions during the quarter, the company was able to record positive pricing actions in excess of 3% in the United States and in EMEA. Due to continued cost pressures, the company is planning for a net sales price increase in the range of 6% market-wide in the United States effective September 1, 2022. The company is also monitoring the opportunity for additional pricing actions internationally as well as in United States. According to the Nielsen reports, for the 13 weeks through April 23, 2022, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 11.5% versus the same period a year ago. Sales of the company's energy brands, including Reign, were up 8.6% in the 13-week period. Sales of Monster were up 10.6%. Sales of Reign were down 6.1%. Sales of NOS decreased 3.5% and sales of Full Throttle increased 5.5%. Sales of Red Bull increased 7.8%. Sales of Rockstar increased by 0.4%. Sales of 5-Hour decreased 1.2% and VPX Bang's sales decreased 8.1%. The sales growth of the Monster brand exceeded that of Red Bull in the period. According to Nielsen, for the 4 weeks ended April 23, 2022, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars, increased 3.8% over the same period the previous year. Sales of the company's energy brands, which include Reign increased 4.8% in the 4-week period in the convenience and gas channel. Sales of Monster increased by 5.7% over the same period versus the previous year. Reign sales decreased 2%, NOS was down 2.3%, and Full Throttle was up 7.1%. Sales of Red Bull were down 0.4%. Rockstar was down 1.7%. 5-Hour was down 5.2% and VPX Bang sales decreased by 11.7%. According to Nielsen, for the 4 weeks ended April 23, 2022, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, increased 0.4 of a point to 37.5%. Monster share increased 0.6 share points to 31.6%. Reign share decreased 0.1 of a share point to 2.4%. NOS' share decreased 0.2 points to 2.6%. And Full Throttle share remained at 0.7 of a percent. Red Bull's share decreased 1.5 points to 35.3%. Rockstar share was down 0.2 points to 3.6%. 5-Hour share was lower by 0.4 of a point to 4.4%. And VPX Bang share decreased 1.2 points to 6.6%. According to Nielsen, for the 4 weeks ended April 23, 2022, sales, in dollars, of the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel, decreased 5.3% over the same period the previous year. Sales of Java Monster, including Java Monster 300 and Java Monster Nitro Cold Brew were 2.4% higher in the same period versus the previous year. Sales of Starbucks Energy were 11.7% lower. Java Monster's share including Java Monster 300 and Java Monster Nitro Cold Brew of the coffee plus energy category, which primarily included Java Monster, Java Monster 300, Java Monster Cold Brew, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee, for the 4 weeks ended April 23, 2022, was 55.3%, up 4.2 points, while Starbucks Energy share was 42.9%, down 3.1 points. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended March 26, 2022, the energy drink category increased 13.5% in dollars. Sales of the company's energy drink brands increased 11.6% versus a year ago. The market share of the company's energy drink brands was 41.5% down 0.7 points. Monster sales increased 13.3% and its market share remained at 37.1%. NOS' sales decreased 12.8% and its market share decreased 0.4 of a point to 1.5%. Full Throttle sales decreased 14.9% and its market share decreased 0.2 of a share point to 0.05 share points. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 25.4% for the month of March 2022. Monster sales increased 28.9%. Monster's market share in value increased 0.8 of a share point to 28.3% against the comparable period the previous year. Sales of Predator increased 67% and its market share increased 0.9 of a share point to 3.7%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for the month of March 2022 compared to March 2021, Monster's retail market share in value decreased in Argentina from 45.2% to 45%. Monster's Energy continues to be the leading energy brand in value in Argentina. According to Nielsen, for the month of March -- month of March 2022 compared to March 2021, Monster's retail market share in value increased in Brazil from 34.9% to 40.2%. Monster is now the leading energy brand in value in Brazil, marking another important milestone for our brand in South America. In Chile, Monster's retail share for the month of March 2022, decreased from 40% to 36.3%, due to a shortage of shipping containers. Our bottler in Chile is in the process of validating its new production line in order to increase our in-country production. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide, because the channels read by Nielsen in EMEA vary from country to country, and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period ending April 2, 2022, Monster's retail market share in value as compared to the same period of the previous year, grew from 14.7% to 16.2% in Germany. Monster's retail market share in value as compared to the same period the previous year declined from 20.7% to 20.3% in South Africa. According to Nielsen, in the 13-week period ending March 27, 2022, Monster's retail market share in value as compared to the same period the previous year, grew from 25.5% to 27.1% in Denmark, from 31.9% to 32.1% in France, from 27.9% to 29.3% in Great Britain, from 27.2% to 27.6% in Norway, from 18.1% to 21.4% in Poland, from 36% to 37.8% in Spain, and from 14.9% to 15.9% in Sweden. Monster's retail market share in value as compared to the same period the previous year declined from 15.2% to 14.9% in Belgium, from 8.1% to 7.9% in the Netherlands, and from 28% to 27.9% in the Republic of Ireland. According to Nielsen, in the 13-week period ending February 27, 2022, Monster's retail market share in value as compared to the same period the previous year grew from 15.8% to 17.7% in the Czech Republic, from 37.2% to 38.3% in Greece, and from 27% to 27.6% in Italy. According to Nielsen, in the 13-week period until the end of February 2022, Predator's retail market share in value as compared to the same period the previous year grew from 14.5% to 23.3% in Kenya, and from 3.3% to 14.7% in Nigeria. According to IRI in Australia, Monster's market share in value for the month ending April 10, 2022, increased from 13% to 13.6%, as compared to the same period the previous year. Mother's market share in value decreased from 11.5% to 10.4% during the same period. The market share of the company's brands in Australia for the month ended April 10, 2022, decreased from 24.5% to 24%. According to IRI in New Zealand, Monster's market share in value for the 4 weeks ended April 17, 2022, increased from 12.7% to 12.9%, as compared to the same period the previous year. Live+'s market share in value decreased from 6.4% to 6.1%, and Mother's market share in value increased from 5.6% to 5.7%. The market share of the company's brands in New Zealand for the 4 weeks ended April 17, 2022, remained at 24.7%. According to INTAGE in Japan, in the last month ending March 2022, Monster's market share in value in the convenience store channel as compared to the same period the previous year, grew from 50.1% to 52.5%. According to Nielsen in South Korea, in the last month ending March 2022, Monster's market share in value in all outlets combined, as compared to the same period the previous year, grew from 54.8% to 59.4%. We again point out that in certain market statistics that cover single months, or 4-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $553.4 million, 36.4% of total net sales in the 2022 first quarter compared to $459.4 million or 36.9% of total net sales in the corresponding quarter in 2021. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $32.9 million in the 2022 first quarter. Included in reported geographic sales are our sales to the company's military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2022 first quarter increased 21.8% in dollars and increased 30% in local currencies over the same period in 2021. Gross profit in this region, as a percentage of net sales, for the first quarter was 29.6% compared to 37.3% in the same quarter in 2021. Gross profit in the first quarter was impacted by higher aluminum commodity pricing, increased freight for imported cans, increased raw material and ingredient costs, as well as airfreight costs. In -- the company is continuing to address the controllable challenges in its supply chain in EMEA. We're also pleased that in the 2022 first quarter, Monster gained market share in the Czech Republic, Denmark, France, Germany, Great Britain, Greece, Italy, Norway, Poland, Spain and Sweden. In Asia Pacific, net sales in the 2022 first quarter increased 1.9% in dollars and increased 9.4% in local currencies over the same period in 2021. Gross profit in this region, as a percentage of net sales, was 40.9% versus 48.8% over the same period in 2021. In Japan, net sales in the 2022 first quarter decreased 5.8% in dollars, but increased 3.4% in local currency. Sales decreased over the same period in 2021, largely due to COVID-19 restrictions in Japan. In South Korea, net sales increased 71.7% in dollars and 86.1% in local currency as compared to the same quarter in 2021. Monster remains the market leader in Japan and South Korea. In China, net sales decreased 8.9% in dollars and 10.8% in local currency as compared to the same quarter in 2021, largely impacted by COVID-related lockdowns. We remain optimistic about the prospects for the Monster brand in China. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales decreased 13.8% in dollars and 7.9% in local currencies. Sales in Australia and New Zealand were negatively impacted by shipping delays of certain flavors, concentrates and ingredients. Furthermore, sales in Australia were also impacted by severe flooding in that country in the 2022 first quarter. In Latin America, including Mexico and the Caribbean, net sales in the 2022 first quarter increased 52.5% in dollars and increased 59.7% in local currencies over the same period in 2021. Gross profit in this region, as a percentage of net sales, was 35.4% for the 2022 first quarter versus 37.9% in the 2021 first quarter. In Brazil, net sales in the 2022 first quarter increased by 72.1% in dollars and 67.4% in local currency. Net sales in Mexico increased 37.7% in dollars and 41.4% in local currency in the 2022 first quarter. Net sales in Chile increased 28.4% in dollars and 45.5% in local currency in the 2022 first quarter. Net sales in Argentina increased 103.1% in dollars and 146.4% in local currency in the 2022 first quarter. I will now discuss our litigation with Vital Pharmaceuticals, Inc., which I will refer to as VPX, the maker of Bang Energy Drinks. In June 2020, Monster Energy Company, which I will refer to as MEC and Orange Bang, Inc., a family-owned beverage business and the rightful owner of several trademark registrations to the Bang marks, initiated an arbitration against VPX. MEC and Orange Bang allege that VPX reached a 2010 settlement agreement with Orange Bang that restricted VPX's use of the Bang trademark to products that are creatine-based or marketed and sold only in nutritional channels as well as claims at VPX infringed Orange Bang's trademark rights to the Bang marks. In April 2022, the arbitrator issued a final award finding in favor of MEC and Orange Bang on all claims. The arbitrator found that VPX's Bang Energy Drinks, which VPX advertisers containing super creatine and other Bang branded products do not contain creatine, and do not provide the benefits of creatine. Because Bang branded products are thus not creatine-based, and are not limited to nutritional channels, the arbitrator found they are being sold in breach of the settlement agreement. The arbitrator also found that VPX's Bang branded product infringe Orange Bang's trademarks. The arbitrated rewarded MEC and Orange Bang $175 million to remedy VPX's past misconduct and attorney's fees and costs, which amounted to nearly $9.3 million. The arbitrator also ordered VPX to pay MEC and Orange Bang an ongoing 5% royalty on all future net sales of Bang products. Pursuant to the terms of the agreement between MEC and Orange Bang, the award and future royalties will be shared equally between MEC and Orange Bang. Under the arbitrator's order, if VPX fails to pay the royalty, VPX is prohibited from using the Bang mark, subject to certain limited exceptions. MEC and Orange Bang have filed a motion to confirm the arbitrator's award. VPX has filed a motion to vacate the arbitration award. A hearing on VPX's motion is scheduled for June 27, 2022. MEC's lawsuit against VPX for false advertising, unfair competition, and misappropriation of trade secrets in the Central District of California is still pending, with trials scheduled to begin in August 2022. As this litigation and other pending proceedings with VPX are subjudicate, we will not be answering any questions on those matters in today's call. In January of 2022, we introduced our first 16-ounce Ultra Variety 12 packs, which are being well received by consumers, and we are continuing to expand our multi-pack portfolio in the 2022 first quarter. In February of 2022, we introduced new flavor innovations with Ultra Peachy Keen, Juice Monster Aussie Style Lemonade, Rehab Watermelon and Reign Reignbow Sherbet. In February 2022, we launched our newest brand nationally, True North Pure Energy Seltzer in 4, 12-ounce flavors through the Coca-Cola distribution network. At the end of the 2022, 1st quarter, we launched 2 new ready-to-drink nitro-infused coffee products, Java Monster Cold Brew Latte and Java Monster Cold Brew Sweet Black. In Canada, in January of 2022, we introduced Monster Ultra Gold. In February of 2022, we grew Canada's Reign portfolio by launching Reign White Gummy Bear. We successfully launched several new products across Latin America in the first quarter of 2022. In Argentina, we launched VR46 The Doctor. In Chile, we expanded our Reign Lemon by launching Melon Mania, Lemonades and Orange Dreamsicle. In Mexico, we launched our second Predator SKU with Predator Mean Green. We also launched Monster Ultra Gold in Puerto Rico and Monster Mango Loco in Colombia. In the 2022 first quarter, we launched Monster Ultra Gold and Mother Kiwi Sublime in Australia and New Zealand. We launched our third Super Fuel flavor in Tropical Thunder. In EMEA, in the first quarter of 2022, we launched Monster Mule, Monster Nitro and Monster Assault in a number of countries. We also launched Ultra Fiesta, Watermelon and Gold and Juiced Monarch, Khaotic and Pacific Punch in a number of countries during the 2022 first quarter. During the 2022 first quarter, we also launched Predator and Reign in additional countries. During the first quarter of 2020, we launched Monster Pipeline Punch in Singapore. We also introduced the Predator brand in India. In April 2022, we launched Monster Mango Loco in Japan. We are planning to introduce the Predator brand in several additional countries in APAC in the course of 2022. Our co-packing network is an integral part of the company's production model, which we intend to preserve. The owner of one of the co-packing facilities with which we contracted located in Norwalk, California, announced earlier this year that they would be selling this facility and ceasing its operations at this facility. To maintain adequate supply of the company's products, we have acquired the associated real property, leases and equipment of this co-packing facility for a purchase price of $62.5 million. Following the purchase, the facility will be closed for a period of time, before the company is able to commence production. We estimate April 2022 sales including CANarchy to be approximately 6.7% higher than in April 2021 and 4.8% higher than in April 2021, excluding CANarchy. On a foreign currency adjusted basis, excluding CANarchy, April 2022 sales would have been approximately 7.7% higher than the comparable April 2021 sales. April 2022 had 1 less selling day compared to April 2021. We mentioned that April 2022 sales had a challenging hurdle to meet over April 2021 sales. You may recall that in our 2021 first quarter conference call to shareholders, we estimated that April 2021 sales were approximately 71.3% higher than in April 2020. Please keep in mind that the comparative 2020 sales were materially adversely impacted by the COVID-19 pandemic. In our 2020 first quarter conference call to shareholders, we estimated that April 2020 sales were 22.2% lower than our April 2019 sales. April 2021, April 2020 and April 2019, all had the same number of selling days. The company had sufficient can capacity and co-manufacturing filling capacity across all regions to address demand for April. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches, and the timing of price increases, and promotions in retail stores, distributor incentives as well as shifts in the timing of production, in some instances where our bottlers are responsible for production, and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers, as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions, our new product innovation launches in those regions could be delayed. In conclusion, I would like to summarize some recent positive points. The company continues to address challenges in its supply chain by sourcing cans and primary ingredients and blends, increasing its manufacturing capacity and increasing finished product inventories. This should enable us to improve our service levels and lower transportation costs across North America, EMEA and LatAm. Our AFF's flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. We are pleased with the new additions to the Monster Energy portfolio. We are planning to continue additional launches of our Reign, Total Body Fuel high performance energy drinks in additional international countries. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in an additional number of international countries. We are enthusiastic about the opportunities that CANarchy presents. While we believe that we will be able to address many of the supply chain challenges we have faced, we anticipate still having to face certain ongoing challenges in the future. I would now like to open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] Our first question comes from Dara Mohsenian from Morgan Stanley. Dara Mohsenian: Your U.S. sales continue to come in very strong again this quarter, and show a sustained decoupling versus the scanner data, implying obviously very strong growth in the untracked channels. Can you just review for us what level of growth you're seeing in those untracked channels? What are the key drivers behind it? And then as we think about the U.S. going forward, can you discuss your thoughts on potential Monster top line weakness or category weakness, if we do see a consumer spending slowdown? And if you think we've seen any demand impact so far from higher gas prices? Hilton Schlosberg: So Dara, turning to your first question, there's always a disconnect between our sales, which are sales in the main to distributors and as well, we sell, obviously, to some direct accounts, including the untracked channels. It's really difficult for us to get that information to this investor group. There will always -- all I can say is there will always be a disconnect. And Nielsen is not a true indication even for sales through the distributor system, because the lags in the distribution system as well. And then turning to your second question about gas prices. We've seen this before. We've seen gas prices moving up, and we've seen sales of energy drinks really staying the course. And at the end of the day, remember that we have a business that is based on a brand, that is a lifestyle brand, and consumers purchase the Monster product because it's part of what they believe to be, and it's what they want to be. It's not something that's necessarily that price-sensitive and that made us kind of feel confident about our decision to take up pricing later this year. We've really took pricing up, as we mentioned, through pricing actions, and we will be taking pricing up effective September 1. Rodney Sacks: The only thing I would maybe add just from 1 aspect. Traditionally, the convenience channel was growing more quickly for the energy category than the mainstream grocery and drug channels. And in recent quarters, that had been reversed with less -- lower driving through COVID and then you've got higher gas prices. So I mean, at the moment, if you look at the latest 4 weeks or 1-week numbers, the convenience channel is growing less than if you look at the all major channels. But I think that's something that we've managed to achieve the results. We have -- despite that and despite the fact that, in fact, convenience is our largest channel, which I just think is positive for the future, because we think that will ride itself eventually when gas prices sort of normalize and/or people just get used to the gas prices and becomes whatever the level is, people will get used to it eventually and continue to drive. Hilton Schlosberg: If you look, for example, at the last 2 weeks, Nielsen in convenience, April the 16, we're seeing Nielsen sales in convenience for the energy category growing at 4.8%. And we're seeing the following week, which is April 23, which is what we discussed on this call, convenience in that 1-week growing 7%. So the market will continue to grow. As I said earlier, Monster is an affordable luxury, and we don't anticipate at this time seeing a dramatic falloff in sales in the convenience and gas channel. Operator: Our next question comes from Andrea Teixeira from JPMorgan. Andrea Teixeira: Rodney, on the 6% price increase starting in September in the U.S., I'm assuming that's on top of the 3% average that you had in Q1. And is that across -- it's great, and is that across all products and channels or balanced with RGM? And what are you hearing from retailers in terms of competitors following or not? Hilton Schlosberg: So that price increase is in addition to the pricing actions that we took in the first quarter that we started taking in the last quarter of 2021, and will continue through this year. So we have taken pricing actions. We'll continue to take pricing actions. September 1, there will be a market-wide increase. And we said approximately 6% depending on channel. And so far, we have not heard any rumblings from competitors about what they're doing and what they're not doing. We haven't heard anything from retailers. But as I said on a previous call, we're running our own brand, irrespective of the competitors. We believe in the power of our brand, and we have strong brands, and we believe that this pricing action is justified. And it's certainly justified in terms of all the costs, that we are seeing the cost increases and no doubt, our competitors are seeing the same cost increases. Operator: Our next question comes from Bonnie Herzog from Goldman Sachs. Bonnie Herzog: So you guys called out certainly many pressures this quarter impacting your business to really fill the strong underlying demand. Yet, I just wanted to circle back, because I thought you guys had made some progress in some of the distribution inefficiencies such as maybe already purchasing more supply in the U.S. during the quarter as well as started to operate back within your orbit. So maybe touch on that for us, please? And then, Rodney, can you help us understand maybe where things stand now as it relates to some of these pressures. Have they already started to ease? You mentioned a few things, but just trying to confirm that you've already seen improvement or is it really going to take until the second half until we see improvements on your gross margins? And then finally, I'd be curious to hear how much stronger your sales might have been in the quarter if you could have supplied enough product to fill a strong consumer demand? If you could quantify that for us, that would be helpful. Hilton Schlosberg: Let me just deal with the first part of your question, Bonnie, and then we can obviously get Rodney's input on the rest. As we look at the quarter, remember, the Ukraine conflict started on February the 24. So we had a dramatic increase in fuel prices, which we really didn't forecast. And we also had a dramatic increase in aluminum prices. And if you just look at aluminum prices, aluminum, the commodity went up 65% in Q1 '22 versus the previous year Q1 2021. So there were unexpected issues that surfaced in the quarter. I think we said at the time that we were building up inventories and that's what we've been doing. We've absolutely been building up inventories in the quarter, and you'll see that reflected in our balance sheet. We're probably in a good position now, better than we have been in terms of supply. And as we also said on this call is that April, we did not have a shortage of containers or product to any significant degree. So we're as well placed as we have been in the past to satisfy demand. Operator: The next question comes from Kevin Grundy from Jefferies. Kevin Grundy: Two, if I could. Just to come back to the 6% pricing, which is certainly a step in the right direction, but not nearly enough to cover the inflationary pressures that you've seen over the past couple of years. Maybe just comment on the magnitude of it, how you arrived at that, why you believe that's the appropriate number? And then with respect to the April sales update and not to overweight any one given month, and your point in the comparison is entirely fair. But anything that you're seeing within the business that gives you any concern about underlying demand. It certainly doesn't sound that way, but I just wanted to ask given the step-down from what we saw from very strong results in the quarter. Hilton Schlosberg: Remember the hurdle we had in '21, that was probably one of the biggest hurdles we've seen. And -- so I think that April, as we've always said, 1-month in isolation should not be construed as indicative of performance for a quarter or a longer period of time. The way we got to our price increase is -- price increase, remember, we're already taking pricing actions. And we look at a whole bunch of factors, and there's a whole lot of factors that we take into account in determining where we should be. And obviously, price points are a big driver. And what we believe is fair and that the consumer will bear, that becomes a very big factor in assessing the price points and then, of course, assessing the extent of the price increase. Operator: The next question comes from Mark Astrachan from Stifel. Mark Astrachan: I guess just a short question. So anything preventing the company from buying stock back once the quiet period post the Q filing is complete? Hilton Schlosberg: No. It's a short answer. Rodney Sacks: You've answered it. We will be recommencing some buying activities. Hilton Schlosberg: It's a short question and short answer. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Rodney Sacks for any closing remarks. Rodney Sacks: Thanks very much. 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 continue to innovate, 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 believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you will stay safe and healthy. Thank you very much for your attendance. Operator: Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good afternoon, and welcome to the Monster Beverage Company's Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Rodney Sacks and Hilton Schlosberg, Co-CEOs. Please go ahead. Rodney Sacks : Thanks. Good afternoon, ladies and gentlemen. Thanks for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom will now read our cautionary statement. Tom Kelly: Now 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 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 March 1, 2021, including the sections contained therein 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. I would now like to hand the call over to Rodney Sacks. Rodney Sacks : Thanks, Tom. The company achieved record fourth quarter and full year net sales with annual net sales topping the $5.5 billion mark for the first time in the company's history. Despite certain challenges in the 2021 fourth quarter, the company achieved solid results overall. We note that the comparative 2020 fourth quarter included a nonrecurring tax benefit of $165.1 million as well as reduced marketing, sponsorships and certain other operating expenses, largely as a consequence of the COVID-19 pandemic. These items should be taken into consideration when evaluating comparative performance over the 2020 fourth year and full year, -- fourth quarter and full year. During the 2021 fourth quarter, the company continued to procure additional quantities of aluminum cans from suppliers in the United States and abroad in response to increased consumer demand. In addition, the company continued to experience additional global supply chain challenges, including freight inefficiencies, shortages of shipping containers, port of entry congestion and delays in the receipt of certain ingredients. In the United States, the company lacked sufficient co-packing capacity to meet increased demand for certain of its products. As a result, the company was not able to fully satisfy increased demand for its products in a number of markets in the 2021 fourth quarter. During the 2021 fourth quarter, the company experienced increased aluminum can costs attributable to higher aluminum commodity pricing as well as the cost of importing aluminum cans. In addition, the company experienced increased ingredient and other input costs, including shipping and freight, labor, trucking, fuel, co-packing fees, secondary packaging materials, increased outbound freight costs and production and efficiencies, which resulted in increased costs of sales and increased operating costs in the 2021 fourth quarter. The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. In the fourth quarter of 2021, net sales were $1.43 billion compared with $1.20 billion in the fourth quarter of 2020, an increase of 19.1%. Adjusting for foreign currency movements, net sales for the 2021 fourth quarter would have been up 19.3%. The comparative net sales for the 2020 fourth quarter were negatively impacted by $15.2 million related to prior returns from our customers as a result of a European formulation issue with a limited number of products in Europe and labeling issue concerning 1 product in Japan, which we will refer to as the 2020 product returns. Gross profit as a percentage of net sales for the 2021 fourth quarter was 53.9% compared with 57.7% in the 2020 fourth quarter. The decrease in gross profit as a percentage of net sales for the 2021 fourth quarter was primarily the result of increased freighting costs, increased aluminum can costs attributable to higher aluminum commodity pricing, geographical and product sales mix and production inefficiencies. Operating expenses for the 2021 fourth quarter were $334.7 million compared with $288.4 million in the 2020 fourth quarter. As a percentage of net sales, operating expenses for the 2021 fourth quarter were 24.9% compared with 24.1% in the 2020 fourth quarter and 28.9% in the 2019 fourth quarter pre-COVID. The increase in operating expenses was primarily due to increased outbound freight and warehouse costs, increased expenditures for sponsorships and endorsements and increased expenditures for other marketing activities including social media and digital marketing and increased payroll costs. During the comparative 2020 fourth quarter, the company decreased expenditures for sponsorship and endorsements and decreased expenditures for travel and entertainment, each largely as a consequence of the COVID-19 pandemic. The impact of the COVID-19 pandemic was less pronounced on our sales and marketing programs during the 2021 fourth quarter. Distribution costs for the 2021 fourth quarter increased to $69.8 million, which is an increase of 48.4% or 4.9% of net sales compared to $47 million or 3.9% of net sales in the 2020 fourth quarter and 3.5% of net sales in the 2019 fourth quarter. Operating income increased 2.6% to $412.9 million from $402.3 million in the fourth quarter of 2020. We believe that a portion of the increase in costs that we experienced in the quarter and the 2021 full year are likely to be transitory. With our 2 new suppliers of aluminum cans in the United States operational, we will begin to decrease our reliance on the use of imported aluminum cans in the United States, although we will continue to import aluminum cans into the United States, although at a reduced level in the first half of 2022. In 2022, we expect to continue to import aluminum cans into EMEA reducing such imports in the second half of 2022. The supply chain challenges we are experiencing are significantly increasing and the logistic costs of importing and shipping raw materials and ingredients as well as other freighting costs, which are included in cost of sales. The cost of repositioning finished products to distribution centers are included in freight-in costs. We are rebuilding and increasing inventories in an effort to reduce the excessive cost of trucking long distances to satisfy demand and to return to our Orbitz strategy of producing in proximity to our customers. Increased freight in costs, including the shipment cost of importing cans amounted to approximately $38 million in the 2021 fourth quarter and approximately $100 million for the 2021 full year. Our out-of-orbit freight costs, which are included in distribution expenses amounted to approximately $15 million in the 2021 fourth quarter and $54 million for the 2021 full year. Net income decreased 31.9% to $321.3 million as compared to $471.7 million in the 2020 comparable quarter. Net income for the 2020 fourth quarter was positively impacted by the recognition of a nonrecurring tax benefit of approximately $165.1 million. Net income for the comparative 2020 fourth quarter, excluding the nonrecurring tax benefits, the impact of the 2020 product returns, associated inventory provisions and other related costs was $328.6 million. Diluted earnings per share for the 2021 fourth quarter decreased 32.1% to $0.60 from $0.88 in the fourth quarter of 2020. Diluted earnings per share for the comparative 2020 fourth quarter excluding the nonrecurring tax benefit, the impact of the 2020 product returns, associated inventory provisions and other related costs was $0.62. According to the Nielsen reports, for the 13 weeks through February 12, 2022, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 13.3% versus the same period a year ago. Sales of the company's energy brands, including Reign, were up 8.1% in the 13-week period. Sales of Monster were up 10.5%. Sales of Reign were down 1.7%. Sales of NOS decreased 12.5% and sales of Full Throttle increased 12.4%. The decrease in sales of NOS retail during the fourth quarter was as a result of shortages in the supply of concentrate for NOS. The NOS supply issues are improving. Sales of Red Bull increased 13.8%. Sales of Rockstar decreased by 1.3% and sales of 5-Hour increased 2.1%. Sales of VPX Bang increased 0.4%. According to Nielsen, for the 4 weeks ended February 1, 2022, and sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars, increased 7.4% over the same period the previous year. Sales of the company's energy brands, which include Reign increased 4% in the 4-week period in the convenience and gas channel. Sales of Monster increased by 5.7% over the same period versus the previous year. Reign sales decreased 0.9% and NOS sales was down 10.8% and Full Throttle was up 6.3%. Sales of Red Bull were up 8.3%, Rockstar was down 4.5% and 5-Hour was down 1.3%. VPX Bang's sales decreased 4%. According to Nielsen, in the 4 weeks ended February 12, 2022, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased 1.2 points to 37.2%. Monster share decreased 0.5 a share point to 31.6%. Reign's share decreased 0.2 of a share point to 2.4%. NOS' share decreased a 0.5 of a point 2.5% and Full Throttle share remained at 0.8%. Red Bull's share increased 0.3 points to 36.2%. Rockstar's share was down 0.5 a point to 4%. 5-Hour share was lower by 0.4 of 4.5%. And VPX Bang share decreased 0.8 of a points to 7%. According to Nielsen, for the 4 weeks ended February 12, 2022, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased 2.3% over the same period the previous year. Sales of Java Monster including Java Monster 300 were 4.2% higher in the same period versus the previous year. Sales of Starbucks Energy were 0.7 of a percent higher. Java Monster's share including Java Monster 300 of the coffee -- plus energy category, which primarily includes Java Monster, Java Monster 300, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee, for the 4 weeks ended February 12, 2021, was 53.7%, up 1 point, while Starbucks Energy share was 44.1%, down 0.7 of a point. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended January 29, 2022, the energy drink category increased 12.3% in dollars. Sales of the company's energy drink brands increased 10.8% versus a year ago. The market share of the company's energy drink brands was 40.8%, down 0.6 of a point. Monster sales increased 13.9% and its market share increased to 0.5 points to 36.3%. NOS sales decreased 7.2% and its market share decreased 0.3 point to 1.6%. Full truffle sales decreased 25.4% and its market share decreased 0.3 of 0.25%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 25.9% for the month of January 2022. Monster sales increased 24.5%. Monster's market share in value decreased 0.3 points to 27.8% against the comparable period the previous year. Sales of Predator increased 38.3% and its market share increased 0.3 of a share point to 3.1%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by 1 or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen for the month of January 2022 compared to January 2021, Monster's retail market share in value increased in Argentina from 41.3% to 43.8%. Monster Energy continues to be the leading energy brand in value in Argentina. According to Nielsen, for the month of January 2022 compared to January 2021, Monster's retail market share in value increased in Brazil from 32.2% to 37.8%. In Chile, Monster's retail share for the month of January 2022 decreased from 47.2% to 33.1% due to a shortage of shipping containers. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. In addition, the company experienced supply issues in EMEA during 2021, which impacted the Nielsen statistics in different countries. According to Nielsen, in the 13-week period ending January 29, 2022, Monster's retail market share in value as compared to the same period the previous year grew from 27.3% to 29.5% in Great Britain, from 7.9% to 8.1% in the Netherlands and from 36.8% to 38.4% in Spain. Monster's retail market share in value as compared to the same period the previous year declined from 15.3% to 14.2% in Belgium and from 31.1% to 30.3% in France, and from 20.1% to 19.3% in Poland. According to Nielsen, in the 13-week period ending January 2, 2022, Monster's retail market share in value as compared to the same period the previous year grew from 26.4% to 26.5% in Denmark from 15.1% to 15.8% in Germany and from 14.5% to 14.6% in Sweden. Whilst the retail market share in value as compared to the same period the previous year declined from 27.9% to 27% in Italy from 29.3% to 25.3% in Norway, and from 28.3% to 27.6% in the Republic of Ireland. According to Nielsen for the 13-week period ending December 31, 2021, Monster's retail market share in value as compared to the same period the previous year grew from 15.2% to 15.6% in the Czech Republic, from 37.4% to 38% in Greece and from 20.4% to 20.5% in South Africa. According to Nielsen, in the 13-week period until the end of December 2021, Predators retail market share in value as compared to the same period the previous year grew from 12.9% to 20.8% in Kenya and from 1.9% to 14.4% in Nigeria. According to IRI in Australia, Monster's market share in value for the month ending February 6, 2022, increased from 12.2% to 12.8% as compared to the same period the previous year. Mother's market share in value decreased from 11.8% to 11% during the same period. The market share of the company's brands in Australia for the month ended February 6, 2022, decreased from 24% to 23.8%. According to IRI in New Zealand, Monster's market share in value for the 4 weeks ended February 6, 2022, increased from 11.6% to 13.3% as compared to the same period the previous year. Live+ market share in value remained the same at 7.1% and Mother's market share in value decreased from 6.3% to 6%. The market share of the company's brands in New Zealand for the 4 weeks ended February 6, 2022, increased from 25% to 26.4%. According to INTAGE in Japan, for the month ended January 2022, Monster's market share in value in the convenience store channel as compared to the same period the previous year grew from 50.8% to 56.3%. According to Nielsen, in South Korea for the month of December ended December 2021, Monster's market share in value in all outlets combined as compared to the same period the previous year, grew from 56.5% to 60.2%. Monster continues to be the leading energy brand in Japan and South Korea. We again point out that certain market statistics that cover single months or 4-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $508.1 million, which is 35.7% of total net sales in the 2021 fourth quarter compared to $384.8 million or 32.2% of total net sales in the corresponding quarter in 2020. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $2.4 million in the 2021 fourth quarter. Included in reported geographic sales are our sales to the company's military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2021 fourth quarter increased 47.5% in dollars and increased 46.1% in local currencies over the same period in 2020. Net sales adjusted for the 2020 product returns in this region increased 41.2% in dollars and increased 39.9% in local currencies. Gross profit in this region as a percentage of net sales for the fourth quarter was 32.6% compared to 30.2% in the same quarter in 2020. Gross profit in the fourth quarter was impacted by can freight and raw material airfreight costs. In local currencies, gross profit as a percentage of net sales for the quarter was 32.2%. Gross profit as a percentage of net sales, excluding the impact of the 2020 product returns in this region associated inventory provisions and other related costs was 40.1% for the 2020 fourth quarter. In 2021 fourth quarter, can supply shortages, lack of ingredient availability, it's sufficient canning capacity and a shortage of trucking availability together had an adverse impact on sales in EMEA. In some cases, impacting the availability of our products on shelf at retailers. However, the shortages of trucking availability will largely resolve in the latter part of the quarter. The company is continuing to address the controllable challenges in its supply chain in EMEA by continuing to import cans and expanding its co-packing capacity. We are also pleased that in the 2021 fourth quarter, Monster gained market share in the Czech Republic, Denmark, Germany, Great Britain, Greece, the Netherlands, South Africa, Spain and Sweden. In Asia Pacific, net sales in the 2021 fourth quarter increased 19.2% in dollars and increased 22.8% in local currencies over the same period in 2020. In Asia Pacific, excluding the impact of the 2020 product returns and the labeling issue in this region in the 2020 fourth quarter, net sales in the 2021 fourth quarter increased 10.7% in dollars and 14.1% in local currency over the same period in 2020. Gross profit in this region as a percentage of net sales was 41.4% versus 34.8% over the same period in 2020. Excluding the impact of the 2020 product returns in this region, associated inventory provisions and related costs, gross profit as a percentage of net sales would have been 40.3% in 2020. In Japan, net sales in the 2021 fourth quarter increased 12.7% in dollars and 20% in local currency. Without the impact of the 2020, product returns in Japan net sales decreased 1.2% in dollars and increased 5.2% in local currency over the same period in 2020, largely due to COVID-19 restrictions in Japan. In South Korea, net sales increased 31.3% in dollars and 35.5% in local currency as compared to the same quarter in 2020. Monster remains the market leader in Japan and South Korea. In China, net sales increased 22.6% in dollars and 17.6% in local currency as compared to the same quarter in 2020. We are reevaluating the optimal product range for China going forward. We remain optimistic about the prospects for the Monster brand in China. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 7.5% in dollars and 4.8% in local currencies due to timing of sales into bottlers. In Latin America, which includes Mexico and the Caribbean, net sales in the 2021 fourth quarter increased 17% in dollars and increased 21% -- 21.6% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales was 38.6% for both the 2021 and 2020 fourth quarters. In Brazil, net sales in the 2021 fourth quarter increased by 36.9% in dollars and 39.6% in local currency. Net sales in Chile increased 6% in dollars and 9% in local currency in the 2021 fourth quarter. Net sales in Argentina increased 30.7% in dollars and 66.7% in local currency in the 2021 fourth quarter. There are a number of pending proceedings with VPX but as they are subjudicate, we will not be answering any questions on this matter on today's call. In the United States, we launched our new True North Pure Energy Seltzer line in e-commerce and selected natural channels in the third quarter. In early 2022, we launched this said line nationally into mainstream channels with our Coca-Cola bottlers. In October 2021, we commenced the launch of our new reserve line of Monster Energy drinks in 2 flavors, Watermelon and White Pineapple. We have launched multiple innovation SKUs, 2 new 12-ounce flavors as well as new package configurations in the 2022 first quarter. This month, we launched 4 new flavor extensions in 16-ounce cans to the retail trade, namely Ultra Peachy Keen, Juice Monster Aussie Star Lemonade, Rehab Watermelon and Reign Rainbow Sherbet. In January 2022, we launched additional multipack options, such as 4-pack, Ultra Watermelon, a 4-pack Reign White Gummy Bear, 2 Ultra Variety packages in a 12-pack format. Additionally, we have launched 12-ounce 6 packs of Monster Energy, Zero Ultra, our new Peachy Keen Ultra, Java Monster Mean Bean and Java Monster Loca Mocha, Ultra Peachy Keen also launching in a 12-ounce option along with our Ultra Watermelon. In addition, Java Monster Nitro Cold Brew is scheduled to launch in the 2022 second quarter with 2 lower-calorie SKUs, Sweet Black and Latte. In the 2022 first quarter in Canada, we are planning to launch 9 new innovations, including the transition into a 355 ml 8-pack for Monster Energy, Zero Ultra and Ultra Paradise. In January 2022, we launched Ultra Gold in a 473 ml single can and 4-pack. We also launched Ultra Watermelon in a 4-pack and Ultra Paradise in a 710 ml can. We are in the process of launching a 4-pack Reign of Raspberry as well as introducing Reign White Gummy Bear in a 473 ml can. In the 2021 fourth quarter, we launched Monster Energy Mango Loco in Uruguay and Ecuador as well as Monster Ultra Watermelon and Predator Gold Strike in Trinidad. In Honduras, we expanded our Fury package offerings with the 355 mL returnable glass bottle. We are planning a national launch of Monster Pacific Punch, Monster Dragon Tea Peach, Reign, Orange Dreamsicle and Reign Mango Magic in Brazil in the first half of 2022. Additional 2022 first quarter LatAm innovations include Monster Zero Sugar in Ecuador, Pipeline Punch in Central America and Trinidad Monster Mango Loco in Peru and Colombia and VR46, the doctor in Argentina. In Chile, we are launching Reign Melon Mania, Reign Lemon Heads and Reign Orange Dreamsicle. In Mexico, we will introduce our second predator flavor with Predator Mean Green. In the 2021 fourth quarter in New Zealand, we launched Monster Ultra Fiesta Mango. In the 2022 first quarter, we launched Monster Ultra Gold and Mother Kiwi Sublime in Australia and are planning to launch Super Fuel Tropical Thunder in New Zealand. In EMEA, in the fourth quarter of 2021, we launched Monster Green, Monster Nitro and Monster Result in a number of countries. We also launched Ultra Watermelon, Golden Paradise and Juice Monarch Mango Loca and Pacific Punch in a number of countries during the 2021 fourth quarter. Monster Super Fuel Mean Green Watermelon and Subzero were launched in 2 countries in the fourth quarter of 2021. During the 2021 fourth quarter and 2022 first quarter, we also launched our Strategic Brands innovation and Predator in additional countries. In particular, we launched our Predator Spicy Ginger and Tropical in South Africa. During the fourth quarter of 2021, we launched Monster Rose in Japan in October, and the Predator brand in Vietnam in November 2021. We are planning to introduce the Predator brand in several additional countries in APAC in the course of 2022. We are planning to launch a number of additional products or product lines in our domestic and international markets later this year. On February 17, 2022, we completed our acquisition of CANarchy Craft Brewery Collective, a craft beer and hard sales for company for $330 million in cash subject to adjustments. The transaction brings the Cigar City, Jai Alai IPA and Florida Man IPA, Oskar Blues, Dale's Pale Ale and Wild Basin Hard Seltzer, Deep Ellum, Dallas Blonde and Deep Ellum IPA, Perrin Brewing, Black Ale, Squatters, Hop Rising Double IPA and Juicy IPA and Wasatch, Apricot Hefeweizen brands to our beverage portfolio. The transaction does not include CANarchy stand-alone restaurants. Our organizational structure for our existing energy beverage business will remain unchanged. CANarchy will function independently, retaining its own organizational structure and team. We are enthusiastic about the opportunities that this acquisition presents to us in the alcohol space and through their distribution network. We estimate January 2022 sales to be approximately 20.2% higher than in January 2021. On a foreign currency adjusted basis, January '22 sales would have been approximately 23% higher than the comparable January 2021 sales. January 2022 had 1 more selling day than in January 2021. Although we see some improvement, the company has continued to experience supply chain challenges in January, which adversely impacted sales. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors, such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production in some instances where our bottlers are responsible for production and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales over a short period, such as a single month, should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions, our new product innovation launches in those regions could be delayed. In conclusion, I'd like to summarize some recent positive points. Currently, the company's flavor manufacturing facilities, its co-packers, warehouses and shipment facilities and bottlers and distributors are all operating. The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. We are continuing to experience increased costs in our operations, some of which may be transitory, and we have and are in the process of implementing reductions in promotions and other pricing actions in the United States and EMEA to mitigate against such increased costs. Our AFF flavor facility in Ireland is operational and is providing flavors to our EMEA region and will improve service levels in EMEA. We are pleased with the new additions to the Monster Energy portfolio. We are planning to continue additional launches of our Reign Total Body Fuel high-performance energy drinks in additional international countries. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in a number of international countries. Our supply chain challenges are improving. We are enthusiastic about the opportunities that CANarchy presents. I would like to now open the floor to questions about the quarter and the year. Thank you. Operator: [Operator Instructions] The first question is from Kaumil Gajrawala from Credit Suisse. Kaumil Gajrawala: Thank you operator. Hey everybody. You talked a lot about improved supply and the things you're doing to increase supply. Your margins obviously were down quite a bit, I think, 540 basis points. Speaking -- can you speak maybe more to margins as opposed to just availability of product and how we should be thinking about that within the context of some of the changes that are being made for '22? Hilton Schlosberg: Well, Kaumil, I think that we've been through enlisted the supply chain challenges. And I'm not sure it's worthwhile repeating what we said earlier. But what we did mention on the call and gave some numbers was that the -- certain of those costs in the supply chain are expected to be transitory. And that is, for example, we do satisfy demand, we opened up what we regarded as orbits where we manufactured and distributed within specific geographies. And to satisfy demand, we had to open up those orbits. And the cost of that was pretty exceptional. And we detailed that, I think, on this call. Also to import cans from abroad is a very expensive exercise, as you can imagine. And that we see kind of mitigating in 2022. We have 2 new suppliers coming on stream and they aren't -- in fact, they are on stream. So we will be reducing our dependence on imported cans certainly in the U.S., and then we'll buy some cans, not to the same degree as we did in the first half. And the second half will be -- we believe we'll be self-sufficient with cans in the U.S. In EMEA, we'll continue to input cans, but they will kind of tail off in the second half of the year. So there are some of these costs that are transitory. Some of the costs may stick. There's been costs across the board, and we had a big shock this morning. As no doubt you guys did as well with aluminum, where aluminum plus the Midwest index went up to $1.97 a pound as opposed to what we were paying in last year of just kind of half of that. So there are a lot of costs that are coming to us. The cost that we can mitigate, the cost that we may not be able to mitigate. Now we'll aluminum stay at this level? I don't think anyone knows. So overall, I think we are navigating well through these supply chain challenges. And we're doing the very best we can to ensure that our customers receive product because at the end of the day, as I've always said to this audience, we bank dollars, we don't bank margins, and we have enough profitability in the system to be able to do what we've been doing and make a profit. And unfortunately, the result is that the GP percentage does come down, but we expect that this will not last forever and that margins will be back to some degree as we move forward. Operator: The next question is from Chris Carey of Wells Fargo. Please go ahead. Chris Carey: Hi, good evening everyone. Thank you for the question. I just wanted to follow up on that line. If I look at -- not to be so shortsighted in a way, but where The Street is modeling your gross margins, it's slightly up for 2022. But if I hear you right, if you have aluminum inflation still coming through, you're still going to be sourcing cans from other places. So you have freight costs. Pricing, as you noted, at the annual Investor Day, will be a positive to the story, but maybe not enough to offset this inflation. And so I just want to make sure I'm hearing right that the top line, of course, remains a very good story here, but the gross margins should remain under pressure in 2022 and then really building into 2023 as these costs are a bit transitory. And then if I could, just on the quarter-to-date number, is that mostly international versus the U.S., just given the disconnect to Nielsen sales. So thanks so much for that perspective. Hilton Schlosberg: Well, let's go back to the -- your second question. That number -- the U.S. is very close to that number for January. So we can -- we have a lot of unmeasured channels in our system, and Nielsen is not always a good indicator of our sales to our distributors. So let's go -- if we can, let's take a step back and look at your -- and address your first question. So aluminum jumped up today significantly. It's been moving up I gave you the number as of today, as of yesterday, it was $0.10 a ton less than that. So with this war and everything else going on in the world, I can't say for certain, and I don't think anyone can tell you what aluminum is going to do and what it's going to be. And obviously, with most of our products being packaged in aluminum cans that is a significant item. Looking back at some of your other comments, I mentioned that -- we mentioned at least on the script that we have sufficient cans now. So we're able to start working towards closing off and close going back to the orbits, which means that trading costs should significantly reduce. When? I can't say for certain, but it's going to happen. Other costs in the system are being controlled. And so what -- looking forward, I think that we will continue to have a difficult 2022. Will the margins stay at the level that we talked about on this call? I don't know. Honestly, a lot depends on what happens with aluminum. So the rest of the stuff is coming under control. I mentioned that we were importing less cans into the U.S. than we did in 2020. That will have a positive impact on margins from the second half of the year will be -- we believe, will be totally self-sufficient with cans in the U.S. So that's a positive factor. And then in EMEA, we will be importing cans in the first half with a significant reduction in the second half. So there's a lot of good things in the cost story, but unfortunately, it is what it is. On the sales side and price increases, we spoke about that. On previous calls, as you know, we have a play that we're running, irrespective, really, I think, of what Red Bull is doing, we've come to the conclusion that we're going to run our own play. We know what we want to do, and we're working on reducing promotional ounces. You've seen prices go up already in the trade, and you've seen them going up in Nielsen. So that is something that is happening as well. What else do I want to say? So we spoke about prices went up in the -- through reductions in promotional launches in the quarter that we look at, although at a very modest degree. And as we go through 2022, you'll see prices -- price increases in our business accelerating. Operator: The next question is from Andrea Teixeira of JPMorgan. Please go ahead. Andrea Teixeira: Hi, how are you. I just wanted to perhaps elaborate more on what you said, Hilton on the pricing front. Are you saying that you -- we should be able to see pricing be on what was passed through by top manufacturing at some point in 2022? And then regarding that, are you seeing any impact from the gas stations given the gas price is going up? Or this is not a concern for affordability at this point? Hilton Schlosberg: So you've seen the convenience and gas numbers in Nielsen. They are somewhat lower than the rest of the market of recent. But we've been through higher gas prices before and they haven't really impacted sales. But we are seeing -- if you look at the Nielsen, you'll see that the numbers in convenience and gas in the energy category are reducing. So whether they'll stay at that level, I don't know. But we have been through this before, and we haven't seen a slowdown in sales and energy in the convenience and gas market. And then looking at pricing -- Rodney Sacks : Of a pickup may add -- sorry, just been a little bit of a pickup in the last week. If you look at the single last week's numbers, again, that's a very short period, but we are seeing a pickup in convenience with the price increase -- effective price increase, it still is translating. So we'll see how that extends. Hilton Schlosberg: Yes, it's a 1-week number, sure. And with regard to pricing, we spoke about what we were doing to increase pricing. We're running our play. 24 ounces going up April 1 in low double-digit numbers. So that will be a nice percentage in 24 ounce. And the rest, we're working on, as you know, with our revenue growth management department working on taking promotional allowances down to achieve the same result as a price increase. But we're continuing to monitor whether we need to take a general price increase or not. And if we have to, we will and in particular, with regard to metal, and we don't know where metal is going. But with regard to metal, if it becomes a permanent situation, yes, then we probably have to reconsider and decide what else could be done on the pricing front, but we're not ruling out a general price increase. Operator: The next question is from Kevin Grundy of Jefferies. Please go ahead. Kevin Grundy: Good afternoon guys. I wanted to come back to your strategy on alcohol. So now with the CANarchy deal closed, do you think the company has the right product portfolio, distribution and capabilities at this point in time to deliver against your ambitions? You've been talking about this for the better part of two years and now with this deal closed, do you think you have everything that you need to deliver? And I guess, specifically, just to kind of drill down a little bit, do you think that you need more in terms of capabilities with respect to spirits, both consumer capabilities, a broader wholesaler distribution network? And if the answer to that is yes, how do you intend to sort of address that and is larger scale M&A a possibility? Rodney Sacks : I think that the CANarchy acquisition is not the complete answer to everything. They are craft brands. They are -- they have a distribution network. They have some sales of brands. We do have a good infrastructure in staff there, and we have -- we're going to use that to build on. We are going to look at taking the distribution system, refining a little bit. We're looking at addressing their products and taking steps to invigorate their sales and looking at our own products that we've been developing, that we have discussed previously and taking and deciding where to and help to launch those through the CANarchy system. And we will separately address the possible M&A of additional brands, whether in a -- sort of in the malt side, the beer side or the spirit side. Those are things that are opportunities. But again, we're looking at the whole business now and reviewing it, but it's the platform that is really good for us. And I think that is what is -- that's the function that's going to serve for us. We are going to obviously have to address issues and other matters in getting that fully implemented. It's not just a perfect system that we've taken over. But it's a good base for us, and we're going to build on it, and we're very confident and we're very pleased with having closed that acquisition, which will give us the springboard from here on. Operator: The next question is from Vivien Azer of Cowen. Please go ahead. Vivien Azer: Hi, good evening. Thank you for the questions. I was wondering if you could just offer some better detail on your supply chain in Russia, in the Ukraine and if you could quantify your exposure to those two countries, please? Hilton Schlosberg: Yes. Well, those countries, including Belarus, in Kazakhstan, which really work within that region account for about 10% of our sales in our EMEA sales. So we have a nice business in Russia, which -- we have to see what happens there, and we have a reasonable business in Ukraine. We have staff and we have people in those countries. And it's really concerning is to -- we don't know what will happen, and it's really concerning, frankly. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Rodney Sacks and Hilton Schlosberg for closing remarks. Rodney Sacks : Thank you. On behalf of the company, 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 continue to innovate, 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 believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you will stay safe and healthy. Thank you very much for your attendance. Operator: The conference has now concluded. Thank you for attending today's presentation.

Company Representatives: Rodney Sacks - Co-CEO Hilton Schlosberg - Vice Chairman, Co-CEO Tom Kelly - Chief Financial Officer Operator: Good afternoon, and welcome to the Monster Beverage Company, Third Quarter 2021 Conference Call. All participants will be in listen-only mode. . I would now like to turn the conference over to Rodney Sacks and Hilton Schlosberg Co-CEO. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I’m Rodney Sacks. Hilton Schlosberg, our Vice Chairman and my Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom will now read our cautionary statement. Tom Kelly: 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 are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance, 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 March 1, 2021, 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 obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. Despite the ongoing impact of the COVID-19 pandemic, the company achieved record third quarter net sales. During the 2021 third quarter, the company procured additional quantities of aluminum cans from supplies in the United States, South America and Asia in response to increased consumer demand. However the company continued to experience shortages in its aluminum can requirements in the United States and EMEA during the 2021 third quarter. In addition, the company continued to experience additional supply chain challenges, including freight inefficiencies, trucking availability, shortages of shipping containers, port of entry congestion, insufficient co-packing capacity and delays in receiving certain ingredients in the United States and EMEA. As a result the company was not able to fully satisfy increased demand in the United States and EMEA in the 2021 third quarter. During the 2021 third quarter, the company continued to experience increased aluminum can costs attributable to higher aluminum commodity pricing and costs of importing aluminum cans. In addition the company experienced increased ingredient and import costs, including shipping and freight, labor, trucking, fuel, co-packing fees and secondary packaging materials, and increased outbound freight costs, all of which resulted an increased cost of sales and increased operating costs in the 2021 third quarter. The company continues to address the challenges in its supply chain, as it navigates through the uncertainty of the current global supply chain environment. We are experiencing increased costs in our operations, some of which are likely to be transitory, and we have and are in the process of implementing reductions and promotions, and other pricing actions in the United States and EMEA to mitigate such increased costs. In the third quarter of 2021, net sales were $1.41 billion compared with $1.25 billion in the third quarter of 2020, an increase of 13.2%. Adjusting for foreign currency movements, net sales for the 2021 third quarter would have been up 11.9%. Gross profit as a percentage of net sales for the 2021 third quarter was 55.9% compared with 59.1% in the 2020 third quarter. The decrease in gross profit as a percentage of net sales for the three months ended September 30, 2021 was primarily the result of increased aluminum can costs, attributable to higher aluminum commodity pricing, as well as the cost of importing aluminum cans, logistical costs and geographical sales mix. Operating expenses for the 2021 third quarter were $344.7 million compared to $277.9 million in the 2020 third quarter. As a percentage of net sales, operating expenses for the 2021 third quarter were 24.4% compared to 22.3% in the 2020 third quarter and 24.5% in the 2019 third quarter pre-COVID. In particular, operating costs were adversely affected by increased logistical inefficiencies, including higher freight-out and warehousing costs, a one-time distributor termination fee of $5.3 million and increased selling and marketing expenses, including the resumption of certain sponsorship and deviant activities as compared to the same quarter last year. A number of sponsorship activities were canceled in the comparable quarter last year due to the COVID-19 pandemic. Operating income increased 3.1% to $444.5 million from $458.6 million in the third quarter of 2020, primarily driven by increased import costs, increased transportation, increased selling expenses and a one-time distributor termination fee of $5.3 million. Net income decreased 3% to $337.2 million as compared to $347.7 million in the 2020 comparable quarter. Diluted earnings per share for the 2021 third quarter decreased 3.5% to $0.63 from $0.65 in the third quarter of 2020. According to Nielsen reports for the 13 weeks through October 23, 2021, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots increased by 12.8% versus the same period a year ago. Sales of the company’s energy brands, including Reign were up 7.1% in the 13-week period. Sales of Monster were up 10.7%. Sales of Reign were down 7.6%. Sales of NOS decreased 18.3% and sales of Full Throttle increased 8.9%. It is important to note that with regard to the decrease in sales of NOS, during the third quarter we experienced shortages in the supply of concentrate for NOS, which resulted in reduced production, reduced sales and lack of product availability at retail. The NOS supply issues are improving. Sales of Red Bull increased 15.6%. Sales of Rockstar decreased by 12.5%, and sales of 5-Hour increased 3%. VPX Bang sales increased 5.1%. According to Nielsen, for the four weeks ended October 23, 2021, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars increased 8.8% over the same period the previous year. Sales of the company’s energy brands which include Reign increased 4.3% in the four-week period in the convenience and gas channel. Sales of Monster increased by 7.4% over the same period versus the previous year. Reign sales decreased 6.7%, NOS’s sales were down 17.5%, and Full Throttle was up 7.8%. Sales of Red Bull were up 13.1%, Rockstar was down 14.7%, and 5-Hour was up 1.9%. VPX Bang sales increased 3.4%. According to Nielsen, for the four weeks ended October 23, 2021, the company’s market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased 1.6 points to 36.4%. Monster share decreased 0.4 of a share point to 30.8%. Reigns decreased 0.4 of a share point to 2.4%. NOS’s share decreased 0.8 points to 2.4%, and Full Throttle share remained at 0.8 of a percent. Redbull’s share increased 1.4 points to 37.6%. Rockstar’s share was down 1 point to 3.8%; 5-Hour share was lower by 0.3 of a point at 4.6%. VPX Bang share decreased 0.4 of a point to 7.4%. As previously reported, Coca-Cola Energy is being discontinued in the United States and Canada by the end of 2021. According to Nielsen, for the four weeks ended October 23, 2021, sales in dollars of the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel, increased 1.3% over the same period the previous year. Sales of Java Monster, including Java Monster 300 were 7.1% higher in the same period versus the previous year. Sales of Starbucks Energy were 0.5% lower. Java Monster share including Java Monster 300 of the coffee plus energy category, which primarily includes Java Monster, Java Monster 300, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee for the four weeks ended October 23, 2021 was 52.6% up 2.9 points, while Starbucks’ energy share was 44.5%, down 0.3 points. According to Stackline, which tracks energy drink sales by Amazon in the United States, for the four-week period ending October 2, 2021, sales in dollars in the energy category by Amazon, including energy shots increased to 39.9% over the same period the previous year. Sales of Monster increased 18.9%, and its share was 27.2%, down 4.8 share points versus the same period a year ago. Red Bull sales increased 41.4% and its share was 15.7%, up 0.2 points. Celsius’ sales increased 95.2%, and its share increased 5.5 points to 19.4%. 5-Hour sales increased 0.5% and its share declined 1.1 points to 2.9%. VPX Bang sales increased 36.6% and its share increased 0.1 share points to 5.6%. Reign’s share decreased 0.2 of a share point to 4.8% and Rockstar’s share increased 1.7 share points to 5.2%. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended October 9, 2021, the energy drink category increased 10.5% in dollars. Sales of the company’s energy drink brands increased 13.3% versus a year ago. The market share of the company’s energy drink brands was 41.3%, up 1 point. Monster sales increased 14.4%, and its market share increased 1.2 points to 36.2%. NOS’ sales increased 1%, and its market share decreased 0.2 of a point to 1.7%. Full Throttle sales decreased 5.9%, and its market share remained at 0.7 of a percent. Red Bull sales increased 11.9%, and its market share increased 0.5 of a point to 39.3%. Rockstar sales decreased 1.2%, and its market share decreased 1.4 points to 11.5%. GURU’s sales increased 21.5%, and its share increased 0.4 of a share point to 3.9%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 26.6% for the month of September 2021. Monster sales increased 15.7%. Monster’s market share in value decreased 2.5 points to 26.2% against the comparable period the previous year. Sales of Predator, which was launched in March 2020 increased 95.1% and its market share increased 1 share point to 2.8%. Red Bull sales increased 17.6%, and its market share decreased by 0.5 a point to 6.1%. Vive 100 sales increased 7.6%, and its market share decreased by 3.3 points to 19%. Volt’s sales increased 34.2%, and its market share increased 1.1 share points to 19.5%, while Boost’s sales increased 12.8%, and its market share decreased 0.7 points to 5.3%. Amp’s sales increased 55.5%, and its market share increased 3.4 points to 18.2%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO circle convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen for the month of September 2021 compared to September 2020, Monster’s retail market share in-value increased in Argentina from 44.2% to 47.6%. Monster Energy continues to be the leading energy brand in value in Argentina. Monster’s retail market share in value increased in Brazil, from 33% to 37.6% and now trails Red Bull by only 3.3 points. In Chile, although Monster’s net sales in the third quarter was 34% higher, its retail market share for the month of September decreased from 46.6% to 42.2%, due to robust growth in the energy category in Chile, which has growing 65% for the month of September 2021. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide, because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen, in the 13-week period ending October 10, 2021, Monster’s regional market share in value as compared to the same period the previous year grew from 13.5% to 13.6%; in Belgium, from 25.8% to 26.3% in France, from 25.4% to 29% in Great Britain, from 7.5% to 7.7% in the Netherlands, and from 35.8% to 36.7% in Spain. According to Nielsen, in the 13-week period until the end of September 2021, Monster’s retail market share in value as compared to the same period the previous year grew from 14.2% to 14.9% in Germany, from 37% to 38.6% in Greece and from 18.3% to 20.2% in South Africa. Monster’s retail market share in value is compared to the same period the previous year declined from 20.1% to 19.5% in Poland. According to Nielsen, for the 13-week period ending September 12, 2021, Monster’s retail market share in value as compared to the same period the previous year grew from 25.4% to 27.3% in Denmark, from 26.2% to 27.5% in the Republic of Ireland and from 13.3% to 13.6% in Sweden. Monster’s retail market share in value as compared to the same period the previous year declined from 27.1% to 22% in Norway. According to Nielson in the 13-week period ending August 31, 2021 Monster’s retail market share in value as compared to the same period the previous year grew from 13% to 14.6% in the Czech Republic, and from 19.9% to 29.1% in Italy. In the 2021 third quarter, sales in EMEA were adversely impacted by can and concentrate supply issues and manufacturing capacity constraints, which caused out-of-stocks in many markets. The United Kingdom and certain other countries in EMEA were more adversely affected. Truck shortages also exacerbated our ability to supply and the ability of our bottlers to deliver products to their customers. According to Nielsen in the 13-week period until the end of August 2021, Predator’s retail market share in value as compared to the same period the previous year grew from 9.8% to 18.6% in Kenya and from 0% to 12.2% in Nigeria. We launched our new Predator malt flavor energy drink in Nigeria during the third quarter. The Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country. According to IRI in Australia, Monster’s market share in value for the month ending October 2021 increased from 12.7% to 13.9% as compared to the same period the previous year. Mother’s market share in value decreased from 11.9% to 11.3% during the same period. The market share of the company’s brands in Australia for the month ended October 2021 increased from 24.6% to 25.2%. According to IRI in New Zealand, Monster’s market share in value for the four weeks ended October 17, 2021, increased from 10.6% to 12.6% as compared to the same period of the previous year. Live+ market share in value decreased from 6.7% to 6.3%, and Mother’s market share in value increased from 5.6% to 6.1%. The market share of the company’s brands in New Zealand for the four weeks ended October 17, 2021, increased from 23% to 25%. According to INTAGE, in Japan, for the month ended September 21, 2021 Monster’s market share in value in the convenience store channel as compared to the same period the previous year, grew from 49.9% to 53.9%. According to Nielsen in South Korea, for the month ended September 21, 2021, Monster’s market share in value in all outlets combined as compared to the same period the previous year grew from 54.4% to 60.4%. Monster continues to be the leading energy brand in Japan and South Korea. We again point out that certain market statistics that cover single months or four week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside of the U.S. were $527.4 million, 37.4% of total net sales in the 2021 third quarter compared to $444.5 million or 35.7% of total net sales in the corresponding quarter in 2020. Foreign currency exchange rates had a positive impact on net sales in the U.S. dollars by approximately $16.4 million in the 2021 third quarter. Included in reported geographic sales are our sales to the company’s military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2021 third quarter increased 22.9% in dollars and increased 17.2% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales for the third quarter was 37.7% compared to 39.5% in the same quarter in 2020, primarily due to an unfavorable country product mix and canned freight and raw material air freight costs. In local currencies, gross profit as a percentage of net sales for the quarter was 38.4%. Can supply shortages exacerbated by production disruptions at a major supplier in EMEA, lack of ingredient availability, insufficient canning capacity and a shortage of trucking availability, together had an adverse impact on sales in the third quarter in EMEA, in some cases impacting the availability of our products on shelf at retailers. The company has addressed and continues to address the controllable challenges in its supply trend. We are also pleased that in the 2021 third quarter Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Greece, Italy, the Netherlands, the Republic of Ireland, South Africa, Spain and Sweden. In Asia Pacific, net sales in the 2021 third quarter decreased 1.6% in dollars and decreased 2.2% in local currencies over the same period in 2020, largely due to sales in Japan and China. Gross profit in this region as a percentage of net sales was 43.5% versus 43.2% over the same period in 2020. In Japan, net sales in the 2021 third quarter decreased 0.7 of a percent in dollars and 1.7% in local currency, largely due to COVID-19 restrictions in Japan and distributor inventory adjustments. In South Korea, net sales increased 21.1% in dollars and 15.6% in local currency as compared to the same quarter in 2020. Monster remains the market leader in Japan and South Korea. In China net sales decreased 13.5% in dollars and 20.4% in local currency as compared to the same quarter in 2020. We are re-evaluating the optimal product range for China going forward. We remain optimistic about the prospects for the Monster brand in China. In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales decreased 8.6% in dollars and 13.6% in local currencies due to timing of sales into bottlers. In Latin America, including Mexico and the Caribbean, net sales in the 2021 third quarter increased 57.6% in dollars and increased 57.7% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales was 41% compared to 42.9% over the same period in 2020. In Brazil, net sales in the 2021 third quarter increased by 56.6% in dollars and 54.1% in local currency. Net sales in Chili increased 34.5% in dollars and 27.4% in local currency in the 2021 third quarter. Net sales in Argentina increased 41.6% in dollars and 93.1% in local currency in the 2021 third quarter. There are a number of pending proceedings with VPX, but as they are subjudicate, we will not be answering any questions on this measure on today’s call. In the United States we successfully launched our new True North pure energy salsa line in ecommerce and selected channels, and will launch nationally into mainstream channels with our Coca-Cola bottlers in the first quarter of 2022. In October 2021 we commenced the launch of our new reserve line of monster energy drinks in two flavors, watermelon and white pineapple. In Canada, during July 2021 we successfully launched our monster energy Rehab line in three flavors. We have Tea Plus lemonade, Peach Tea and Strawberry Lemonade. We successfully launched several new products across Latin America in the third quarter of 2021, including Monster Energy Zero Ultra in Paraguay, Monster Energy Zero Sugar in Peru, Monster Ultra Fiesta Mango in Puerto Rico and Monster Ultra Watermelon in the Caribbean. In the 2021 third quarter we expanded our presence at Gold Strike footprint in Mexico by launching in a 355 ML slim can. In Brazil we also launched Monster Pacific Punch, Monster Dragon Tea Peach, Reign Orange Dreamsicle and Reign Mango Magic within a limited territory. We are planning a national launch of all of these products in the first quarter of 2022. In the 2021 third quarter in Australia we launched two new products in Mother Sugarfree Razzle Berry and Monster Ultra Fiesta Mango. In the third quarter of 2021 we launched Monster Mule, Monster Nitro and Monster Assault in a number of countries in EMEA. We also launched Ultra Fiesta and Juiced Monster Monarch in a number of countries during the 2021 third quarter. During the quarter we also launched our strategic brands innovation and Predator in additional countries. In particular, we launched our Predator malt flavored energy drink in Nigeria. During the third quarter 2021 we launched Monster Super Fuel, Blue Streak and Red Dog in July in Japan. Additionally in October 2021 we re-launched Monster Rossi in Japan. As a result of the COVID-19 pandemic still impacting the region, certain of our planned launches of new products in a number of Asia Pacific markets have been deferred until 2022. However, Predator is anticipated to launch later this month in Vietnam. We are planning to launch a number of additional products and/or product lines in our domestic and international markets later this year. We estimate October 2021 sales to be approximately 8.3% higher than in October 2020. On a foreign currency adjusted basis, October 2021 sales would have been approximately 7.9% higher than the comparable October 2020 sales. October 2021 had one less selling day than October 2020. Additionally, the company continued to experience multiple supply chain challenges in October, which adversely impacted sales. In this regard we caution again that sales over a short period are often disproportionately impacted by various factors, such as for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives, as well as shifts in the timing of production. In some instances where our bottles are responsible for production and literally determine their production schedules, which affects the dates on which we invoice such bottlers, as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions, our new product innovation launches in those regions could be delayed. In conclusion, I would like to summarize some recent positive points. Currently the company's flavor manufacturing facilities, its co-packers, warehouses and shipment facilities and bottlers and distributors are all operating. The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. We are experiencing increased costs in our operations, some of which are likely to be transitory and we have and are already in the process of implementing reductions in promotions and other pricing actions in the United States and EMEA to mitigate such increased costs. Our AFA flavor facility in Ireland is operational and is providing flavors to our EMEA region, which would improve service levels in the EMEA. We are pleased with the new additions to the monster energy portfolio. We are planning to continue additional launches of our Reign Total Body Fuel high performance energy drinks in additional international countries. We are pleased with the roll out of Predator and Fury, our affordable energy drink portfolio internationally. We're proceeding with plans to launch our affordable energy brands in a number of international countries. I’d like to open the floor to questions about the quarter. Thank you. Operator: Our first question comes from Wendy Nicholson with Citi. Please go ahead. Wendy Nicholson : Hi! My question has to do with how you're thinking about pricing and promotion, because on the one hand you've got strong market shares, it seems like strong demand, yet you've got capacity constraints and supply chain constraints. So on the one hand you want to keep promotion up to keep people coming to your brand, but if you can't service demand how do you balance those two. If you could talk about what you are thinking about just in the short term over the next few months, how you scale up supply and get more bottles on the shelf, more cans on the shelf. Hilton Schlosberg: Okay Wendy, this is Hilton. That's an excellent question. So we have a department called Revenue Growth Management that balances pricing and balances promotions in line with the expectations that we set for the business and for our brands. So we’ve been working very closely and started in this quarter, in fact slightly before this last quarter in cutting back promotions and using them very judiciously. So we look at this on an ongoing basis. We have plans for 2022 which involves changing retail pricing on shelves, which leads to obesity reduction in promotions and we don't rule out the possibility of a full price increase later on in 2022. But we keep our options open. We prefer to accomplish the objectives through reductions in promotions, but we have to see what the cost environment looks like going into the 2022. Obviously if you haven't got product and you showed a product that doesn't make sense to promote extensively, but we still have to promote in order to fulfill the contract that we've had this year with our customers and our retailers which was set at the beginning of the and so some cannot be changed and as we move into 2020, adjust pricing through promotions and/or price increases. Operator: The question is from Bonnie Herzog with Goldman Sachs. Please go ahead. Bonnie Herzog: Alright, thank you. Hi Rodney and Hilton! Hilton Schlosberg: Hey Bonnie! Tom Kelly: Hey Bonnie! Bonnie Herzog: Hi! I wanted to ask a little bit further on the points you're making about this, outsized demand and that you weren't able to satisfy this increased demand in the quarter and given the shortages. So is there any you guys could help quantify for us the impact that this had on you top line in both the U.S. and EMEA. I mean I'm just trying to understand is that, you know was it a low single digit impact on growth? Could it have been more like a mid-single digit improvement on your top online. Hilton Schlosberg: No, no. Is it one question or two? Bonnie Herzog: Okay, well that’s it. I just want to also understand if the situations improved in Q3 versus Q2. Hilton Schlosberg: Okay, so the situations did not improve in Q3 relative to Q2. Q3 really presented more challenges in supply chain as we anticipated. Although cans have come, we've achieved cans from overseas partners as we expected. So we have cans in the system, we have opened up a number of co-packers in the – which will be supplying in the fourth quarter. So if we look at Q3 and Rodney will probably kill me, but I’ll give you an estimate. My estimate is that we shorted in the high single digits; that's my estimate, in terms of millions of cases. Operator: The next question is from Peter Galbo with Bank of America. Please go ahead. Peter Galbo : Hey guys! Good afternoon. Thank you for taking the question. I was just wondering Hilton, you know the comments on other pricing actions, you know retail pricing on shelves, potential for a full list price increase. Just can you give us a sense on maybe when you would consider that more thoroughly? Is there a reason why it's not now, is there a shelf reset period that you need to wait for. Just, you know listening to some of the commentary from some of the bottlers, it seems like they are taking pricing now. Just why wait? Hilton Schlosberg: So we are not waiting. I mean we already implemented promotional adjustments in this quarter, so we are not waiting. There are certain customers that we have, that we are contractually obligated to maintain pricing and promotions. We've entered into agreements with them that we have new contracts starting in 2022, and those new contracts will address the pricing issues that you're talking about. So we are not waiting. It's already being implemented and some of it in the third quarter as I mentioned, more will fall in the fourth quarter and more will follow in Q1 of 2022. I think we've got a very interesting position in the market and we've got to be careful that whatever we do, we don't disturb the velocity of what our brand is doing at retail. Operator: The next question is from Mark Astrachan with Stifel. Please go ahead. Mark Astrachan: Yes, hey! Good afternoon guys. Hope all's well. I wanted to ask about the Coke relationship. So the can supply shortages, some of the manufacturing challenges that you've laid out in recent quarters, assuming distribution disadvantaged verses Red Bull self-distribution at least in the U.S., how do you think about your relationship with Coke, and importantly how does it get better and what makes it better from here. Hilton Schlosberg: Mark, perhaps I’ll take that one. I mean there are two different relationships, there is Coke as a corporate partner, and there's also the individual Coke bottlers. You know I think that our relationship with Coke is fine. I think there is no issue, it’s a good relationship. I think that with the bottles are relationships again are also good. But I think the bottles have been struggling a little bit as you know with labor issues and cost issues as well. And that has sort of affected I think the level of service to smaller accounts and in field activities and that's why that has perhaps disproportionately hurt our brand over this whole pandemic period and that’s something that we are addressing, particularly when you compare that to, not against other similarly - similar systems, but as against Red Bull which has its own dedicated system out there. And so we are taking steps to address that. We have our home fields’ force that we've implemented to supplement and assist the bottlers. We even had fuel filed forces suffering from labor issues and trying to hire people. It's not been easy, we have a number of open positions. But we are, actually we’ve seen good success from what we've implemented and we actually are expanding on filed team and we are going to do that in conjunction with the bottlers. But that’s part of the challenges we've had in our supply chain and part of the challenges we've had which has affected our sales, have been you know just inefficiencies getting products on shelf. And there are different, different parts of the country and different parts of the world even, it varies and in some cases you see empty shelves or you see shelves that haven’t been refilled, which is obviously heart breaking for us and we try and address it. But that is something we are facing and that's been a labor issue that many of our bottlers are going through at the moment. But hopefully we are trying to work out ways of improving and hopefully that will start improving going forward. But despite that, we've been able to continue to manage pretty healthy increase in sales and it's the, it’s just meeting the increased demand that has been our big challenge. And again, we are working with our bottles to try to achieve what we can. So a tough environment for our bottlers, when also we can’t supply all of their orders and fill them in full, and that’s been difficult for us to juggle deliveries around the country, and it resulted in increased costs out of orbit and in delivering products out of our normal ranges in order to make sure we are trying to maximize deliveries to bottlers. Operator: The next question is from Andrea Teixeira with JPMorgan. Please go ahead. Andrea Teixeira: Thank you. Good afternoon there. I wanted to just go back to the magnitude of pricing in your comments in the last earnings call. That you expect the cost pressures and supply challenge to abate in the fourth quarter. Are you still expecting that to be the case or sequentially quite worse and we should brace for something similar in the fourth quarter against the third quarter. And just for clarification, you said high single digit million cases impact or you said high single digit percentage impact that would have been? Hilton Schlosberg: No, no, no million cases. Andrea Teixeira: Okay, that’s a mid-single digit impact, okay. Hilton Schlosberg: No, well in cases it’s a high, just to be clear it's a high number of cases in millions, in the high single digits. Andrea Teixeira: And on the pricing Hilton, can you let us know the magnitude that you're trying to put through and how we should think about cogs into the fourth quarter. Hilton Schlosberg: Right, so if you look at where we are with cogs, it’s really a difficult situation right now, because I don't know where for example aluminum is going. I think those of you who are tracking aluminum, will know that the aluminum price is significantly, the LME and the Midwest premium is significantly higher than last year. In fact it's up by almost 70% from the - from the similar quarter in the previous year. So and then I’ll turn to what's happened in aluminum. So in the middle of October we ended up with the highest price we've ever seen for aluminum in the Midwest Premium and that's now fallen 15% from its high and now it’s like the end of October. So we don't know what's happening with aluminum. What we do know is that we have substantial quantities of cans; we have two new manufactures that have opened in the U.S. and are beginning to supply us. So that's a fact and we have also opened a number of additional co-packing facilities both in the U.S. and in Europe. So the cans are coming in, we have new co-packing capacity and what I'm hoping is that this inefficient freight that we've been experiencing, you know we spoke on previous calls about operating within orbits to minimize cost of distribution and cost of freight in. So now we've broken those orbits, because we haven't had capacity and we've been anxiously trying to service every case we can. So I'm hoping that in the fourth quarter and it's October really, that with these new co-packers opening up, that with the can capacity that we have, that we will start mitigating these inefficient freight costs that we are experiencing. But you know I can't talk about aluminum, because I don't know what's happening with aluminum and we were very careful not to buy forward on aluminum which, we normally do as our can companies, because we were nervous about what was going to happen. So that's where we are in the fourth quarter. Certainly things are improving, but I cannot say that they are totally solved. And in Europe we've opened up also a number of new co-packers. We’re getting cans in Europe from India and from China, so even the European situation is being elevated. I would say if you compare it to the third quarter, I suspect we will have less issues in the fourth quarter than we have had in the third quarter, if that answers your question. : Operator: This concludes our question-and-answer session. I would like to turn the conference back over Rodney Sacks for any closing remarks. Rodney Sacks : Thank you. On behalf of the company 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 innovate, develop and differentiate our brands and to expand the company both at home and abroad. And in particular expend distribution of our products through the Coca-Cola bottler system internationally. 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. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good day, and welcome to the Monster Beverage Company Second Quarter 2021 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 that this event is being recorded. I would now like to turn the conference over to Rodney Sacks, Co-CEO, to begin the call. Please go ahead. Rodney Sacks: Good afternoon, ladies and gentlemen. Thank you for attending this call. I’m Rodney Sacks. Hilton Schlosberg, our Vice Chairman and Co-Chief Executive Officer, is on the call; as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Tom Kelly: 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 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 March 1, 2021, 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 obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company’s top priority remains the health, safety and well-being of its employees. The company’s flavor manufacturing facilities, its co-packers, warehouses and shipment facilities have operated throughout the COVID-19 pandemic. The company’s bottlers and distributors are operating, and the company’s products remain generally available to consumers. In limited countries, the operations of the company’s bottlers and distributors have, in part, been negatively affected for varying periods of time. Despite the ongoing impact of the COVID-19 pandemic, the company achieved record second quarter net sales. Currently, the company does not foresee a material impact on the ability of its co-packers to manufacture and its bottlers and distributors to distribute its products as a result of the COVID-19 pandemic. The company’s supply chain remains largely intact. However, the company continues to experience shortages in its aluminum can requirements in the United States and EMEA, given the company’s volume growth and the current supply constraints in the aluminum can industry. The company is also experiencing delays in procuring certain ingredients, both domestically and internationally. As a result, the company was unable to fully satisfy demand in the 2021 second quarter in the United States and EMEA. We expect such challenges to continue for the next few months. The company has taken steps to source additional quantities of aluminum cans from the United States, South America and Asia. The company has entered into new supply agreements with two new aluminum can suppliers in the United States, and which are expected to be operational in the 2021 fourth quarter. We expect deliveries of additional quantities of cans increasing sequentially during the latter part of the year. Logistical issues, including shortages of shipping containers and port of entry congestion could delay ongoing international supply of aluminum cans. Separately, we are continuing to experiencing – experience freight inefficiencies as well as significant increases in domestic and international freight costs and like other beverage companies are incurring increased aluminum can and other costs in the current environment, all of which in addition to other factors, will continue to adversely impact gross margin percentages. In the second quarter of 2021, net sales were $1.46 billion, compared with $1.09 billion in the second quarter of 2020, an increase of 33.6%. Adjusting for foreign currency movements, net sales for the 2021 second quarter would have been up 30.1%. Gross profit as a percentage of net sales for the 2021 second quarter was 57.2% compared with 60.3% in the 2020 second quarter. The decrease in gross profit as a percentage of net sales for the three months ended June 30, 2021, was primarily the result of geographical sales mix and increased input costs, mainly increased raw material freight in costs and aluminum can costs. Operating expenses for the 2021 second quarter were $310.9 million, compared with $252.2 million in the 2020 second quarter. As a percentage of net sales, operating expenses for the 2021 second quarter were 21.3%, compared with 23.1% in the 2020 second quarter. Operating income increased 29.1% to $526 million, up from $407.3 million in the second quarter of 2020. Net income increased to 29.7% and to $403.8 million compared to $311.4 million in the 2020 comparable quarter. Diluted earnings per share for the 2021 second quarter increased to 28.6% to $0.75 from $0.59 in the second quarter of 2020. According to the Nielsen reports for the 13 weeks through July 24, 2021, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 14.2% versus the same period a year ago. Sales of the company’s energy brands, including Reign were up 8.6% in the 13-week period. Sales of Monster were up 11.1%. Sales of Reign were down 6.1%. Sales of NOS decreased 4.1%. And sales of Full Throttle increased 7.9%. Sales of Red Bull increased 15.3%. Sales of Rockstar decreased by 15.7%, and sales of 5-Hour increased 8.5%. VPX Bang sales increased 20%. According to Nielsen, for the four weeks ended July 24, 2021, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars increased 7.4% over the same period the previous year. Sales of the company’s energy brands, which include Reign, increased 3.6% in the four-week period in the convenience and gas channel. Sales of Monster increased by 5.8% over the same period versus the previous year, Reign sales decreased 6.8%, NOS was down 10.7%, and Full Throttle was up 13.2%. Sales of Redbull were up 9%. Rockstar was down 18.6%, and 5-Hour was up 3.2%. VPX Bang sales increased 12.2%. According to Nielsen, for the four weeks ended July 24, 2021, the company’s market share of the energy drink category in the convenience and gas channel, including energy shots, in dollars, decreased 1.3 points to 36.5%. Monster share decreased 0.4 of a share point to 30.6%. Reigns decreased 0.4 of a share point to two points – sorry, 2.4%. NOS’s share decreased 0.5 of a point to 2.7%, and Full Throttle share remained at 0.7%. Redbull’s share increased point – six points to 37.4%. Rockstar’s share was down 1.2 points to 3.8%. 5-Hour share was lower by 0.2 points at 4.6%. VPX Bang share increased 0.3 points to 7.6%. As previously reported, Coca-Cola Energy is being discontinued in the United States and Canada by the end of 2021. According to Nielsen, for the four weeks ended July 24, 2021, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel, increased 4.2% over the same period the previous year. Sales of Java Monster, including Java Monster 300 were 5.9% higher in the same period versus the previous year. Sales of Starbucks Energy were 0.4% higher. Java Monster share including Java Monster 300 of the coffee plus energy category, which primarily includes Java Monster, Java Monster 300, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee for the four weeks ended July 24, 2021, was 51.9%, up 0.9 of a share point, while Starbucks’ energy share was 45.5%, down 1.7 points. According to Stackline, which tracks energy drink sales by Amazon in the United States, in the four-week period ending July 3, 2021, sales in dollars in the energy category by Amazon, including energy shots increased to 104.5% over the same period the previous year. Sales of Monster increased 59.9%. And its share was 28.1%, down 7.8 share points versus the same period a year ago. Red Bull sales increased 109.4%, and its share was 16.6%, up 0.4 points. Celsius’ sales increased 133.1%. And its share increased 1.8 points to 14.3%, 5-Hour sales increased 40.9% and its share declined 1.3 points to 2.9%. VPX Bang sales increased 216.1% and its share increased 1.8 share points to 5.2%. Reign’s share decreased 0.1 of a share point to 5.3%. Rockstar’s share increased 0.9 of a share point to 3.9%. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended June 19, 2021, the energy drink category increased 17.9% in dollars. Sales of the company’s energy drink brands increased 28.3% versus a year ago. The market share of the company’s energy drink brands was 41.5%, up 3.4 points. Monster sales increased 18.3%, and its market share increased by 0.1 of a point to 35.4% – sorry, 35.4. NOS’ sales increased 12.6%, and its market share decreased 0.3 of a point to 1.9%. Full Throttle sales decreased 2.1%, and its market share decreased 0.1 of a point to 0.6%. Red Bull sales increased 18.1%, and its market share increased 0.1 of a point to 38.7%. Rockstar sales decreased 8.6%, and its market share decreased 3.3 points to 11. 4%. GURU’s sales increased 35.9%, and its share increased 0.5 of a share point to 4%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 45.2% for the month of June 2021. Monster sales increased 38.7%. Our market share in value decreased by 1.3 points to 27.2% against the comparable period the previous year. Red Bull sales increased 41.4%, and its market share decreased by 0.2 of a point to 6.5%. Vive 100 sales increased 30.2%, and its market share decreased by 2.4 points to 20.5%. Volt’s sales increased 41.1%, and its market share decreased 0.5 of a share point to 18.5%, while Boost’s sales increased 15.7%, and its market share decreased 1.3 points to 5.1%. Amp’s sales increased 91.9%, and its market share increased 4.4 points to 17.9%. Predator, which was launched in March 2020, achieved a market share of 3.1%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen for the month of June 2021 compared to June 2020, Monster’s retail market share in value increased in Argentina from 40.1% to 46.9% and in Brazil from 29.6% to 35.4%. In Chile, Monster’s retail market share decreased from 45.7% to 41.9%. Monster Energy continues to be the leading energy brand in value in Argentina. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen, in the 13-week period ending July 18, 2021, Monster’s retail market share in value as compared to the same period the previous year grew from 34.2% to 37.4% in Spain. According to Nielsen, in the 13-week period to the end of June 2021, Monster’s retail market share in value as compared to the same period the previous year grew from 14.5% to 15.3% in Germany, from 18.4% to 19.4% in Poland and from 18.4% to 20.1% in South Africa. According to Nielsen, for the 13-week period ending June 20, 2021, Monster’s retail market share in value as compared to the same period the previous year grew from 12.5% to 16.2% in Belgium, from 24.2% to 25.3% in Denmark, from 25.8% to 28.2% in France, from 25% to 29% in Great Britain, from 6.7% to 8.4% in the Netherlands, from 27.1% to 31.2% in Norway, from 25.6% to 29.3% in the Republic of Ireland and from 13.4% to 14.5% in Sweden. According to Nielsen, in the 13-week period until the end of May 2021, Monster’s retail market share in value compared to the same period the previous year grew from 13.3% to 14.5% in the Czech Republic, from 35.1% to 37.9% in Greece and from 16.6% to 29% in Italy. According to Nielsen, in the 13-week period until the end of May 2021, Predator’s retail market share in value as compared to the same period the previous year grew from 5.1% to 17.3% in Kenya and from 0% to 8.1% in Nigeria. The Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country. According to IRI in Australia, Monster’s market share in value for the month ending June 2021 increased from 11.6% to 14% as compared to the same period the previous year. Mother’s market share in value decreased from 13.3% to 11.6% during the same period. The market share of the company’s brands in Australia for the month ended June 2021 increased from 24.9% to 25.5%. According to IRI in New Zealand, Monster’s market share in value for the four weeks ended July 11, 2021, increased from 9.9% to 12.4% as compared to the same period of the previous year. Live+ market share in value remained the same at 6.9%, and Mother’s market share in value increased from 6.2% to 6.3%. The market share of the company’s brands in New Zealand for the four weeks ended July 11, 2021, increased from 23.1% to 25.6%. According to Nielsen, in South Korea, Monster’s market share in value in all outlets combined for the month of June 2021 increased from 53.3% to 61.9% as compared to the same period in the previous year. According to INTAGE, in Japan, Monster’s market share in value in the convenience store channel for the month of June 2021 was 50.6% as compared to 51% in the same period the previous year. Monster remains the market leader in Japan. We again point out that certain market statistics that cover single months or four week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside of the U.S. were $546.3 million, 37.4% of total net sales in the 2021 second quarter compared to $328.3 million or 30% of total net sales in the corresponding quarter in 2020. Foreign currency exchange rates had a positive impact on net sales in the U.S. dollars by approximately $38.6 million in the 2021 second quarter. Included in reported geographic sales are our sales to the company’s military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2021 second quarter increased to 105.7% in dollars and increased 86.5% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales for the second quarter was 39.8% compared to 38.1% in the same quarter in 2020, primarily due to a favorable country and product mix. We’re also pleased that in the 2021 second quarter, Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Greece, Italy, the Netherlands, Norway, Poland, the Republic of Ireland, South Africa, Spain and Sweden. In Asia Pacific, net sales in the 2021 second quarter increased 5.2% in dollars and decreased 0.1 of a percent in local currencies over the same period in 2020, largely due to sales in Japan and China. Gross profit in this region as a percentage of net sales was 44.4% versus 43.3% over the same period in 2020. In Japan, net sales in the 2021 second quarter decreased 15.1% in dollars and 13.9% in local currency, largely due to COVID-19 restrictions in Japan and distributor inventory adjustments. Depletions increased 7% during the quarter. Monster remains the market leader in Japan for the month of June 2021. In South Korea, net sales increased 63% in dollars and 50.4% in local currency as compared to the same quarter in 2020. In China, net sales decreased to 21.4% in dollars and 27.8% in local currency as compared to the same quarter in 2020. In this regard, we note that sales in the second quarter of 2020 included the initial launch of Dragon Tea. We are reevaluating the viability of this SKU and the optimal product range for China going forward. We remain optimistic about the prospects for the Monster brand in China. In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased to 146.5% in dollars and 98.2% in local currencies. Sales of the Monster brand in Oceana increased 210% in dollars and 155.6% in local currency as compared to the same quarter in 2020. In Latin America, including Mexico and the Caribbean, net sales in the 2021 second quarter increased to 119.7% in dollars and increased 117.6% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales was 40.7% compared to 41.2% over the same period in 2020, primarily as a result of foreign exchange rates and certain raw materials and ingredients for products in this region are purchased in U.S. dollars. In Brazil, net sales in the 2021 second quarter increased by 194.9% in dollars and 201.7% in local currency. Net sales in Chile increased 77.5% in dollars and 52% in local currency in the 2021 second quarter. Net sales in Argentina increased 291.4% in dollars and 458% in local currency in the 2021 second quarter. In March 2019, VPX, the maker of Bang Energy drinks, sued Monster, alleging that its Reign products infringed VPX’s Bang trademarks and trade risk. A trial was held last year. And on August 3, 2021, the court issued an order denying all of VPX’s claims and holding that VPX is entitled to no relief whatsoever. In fact, the court specifically found that VPX copied its bank trade risk from the original Monster Energy cans. The court’s decision confirms that Monster and Poland retail partners are free to continue to sell our Reign products without any changes and without any restrictions. Monster always believed and maintained that VPX’s claims were frivolous, and we are extremely pleased that the court rejected all of VPX’s claims while vindicating Monster’s rights. As other pending proceedings with VPX are subjudicate, we will not be answering any questions on this matter on today’s call. Our new product introductions in the United States in the first half of 2021 were primarily focused in the first quarter. In the United States, during the second quarter of 2021, we refreshed our can graphics on our Rehab Monster brand family as well as our Full Throttle line, also updating the name for Blue Agave to TrueBlue. Monster Energy Ultra Fiesta received a refresh and updated can graphics as well as the name change to Monster Energy Ultra Fiesta Manga. In May 2021, we launched Monster Ultra Fiesta in a 24-ounce option with an update to our Ultra Fiesta Manga plan for later this year. We are in the process of launching a new line of non-alcoholic pure energy sales under the True North brand name in 12-ounce sleek cans, which contained an organic plant-based energy blend and ingredients for immunity support. True North is being offered in six flavors, Cucumber Lime, Black Cherry, Grapefruit Lemonade, Water Mellon Mist, White Peach Pear and Mandarin Yuzu. True North has a limited customer target in 2021 with plans for a full launch into mainstream channels in 2022. While cognizant of the can shortages, we believe that it is important to continue with our innovation plans. And to this end, we will be launching our new flavors reserve line of Monster Energy drinks in Water Mellon and White Pineapple in October 2021. We have deferred the launch of our new line of Java Monster Cold Brew Coffee+ energy drinks until early 2022. In Canada, during the second quarter, we launched two new products: Monster Punch Papillon and Monster Punch Khaotic, both in a 473 ml can. In April 2021, we launched Reign Orange Dreamsicle in Puerto Rico and our second SKU in Bolivia with Monster Energy Zero Ultra. In El Salvador, we launched Fury Mean Green in May 2021. In the second quarter of 2021, we launched Juice Monster Pacific Punch and Monarch in a number of countries in EMEA. We also launched Ultra Paradise and Ultra Fiesta in a number of countries during the quarter. During the quarter, we also launched our strategic brand innovation and Predator in additional countries. In January 2021, we launched Ultra Rosa market-wide in Australia, following an exclusive lead launch with one chain in the fourth quarter of 2020. In March 2021 in New Zealand, we launched Monster Superfuel in both Purple Passion and sugar-free flavors. During the 2021 second quarter in Japan, we launched Monster Energy Super Cola with our distributor, Asahi Soft Drinks. Additionally, we effected the relaunch at retail of Ultra Paradise and began shipments in anticipation of the launch of Super Fuel early in the 2021 third quarter. Super Fuel has just gone on the shelves in Japan this week. We also launched Mango Loco in Korea in July 2021. During the 2021 second quarter, we launched Pipeline Punch in Taiwan, Hong Kong and Macau. We also began distribution of Monster Energy Zero Sugar in the Philippines. As previously mentioned, in the second quarter of 2021, in China, we extended the national rollout of our new Monster Dragon Gold, which is non-carbonated. Our national summer on-pack promotion began in May with one of China’s top consumer ambassadors. As a result of the COVID-19 pandemic, certain of our planned launches and innovation of new products in a number of Asia-Pacific markets have been deferred for a few months. However, we still anticipate such launches taking place toward the end of the 2021 calendar year. We are planning to launch a number of additional products and product lines in our domestic and international markets later this year. We estimate that July 2021 sales to be approximately 1.8% higher than in July 2020. On a foreign currency adjusted basis, July 2021 sales would have been comparable to the July 2020 sales. July 2021 had one less selling day than July 2020, which was 15.8% above July 2019, and which was 17.1% higher on a foreign currency adjusted basis. Certain production facilities, mainly from the Coke bottlers in EMEA, in particular, delayed production from July to August 2021. Furthermore, as mentioned earlier, the company has not been able to fully satisfy demand in the United States and EMEA due to a shortage of aluminum cans, which adversely impacted July sales. Such shortage was exacerbated in July as can availability did not keep pace with increased demand during the summer months. Additional cans have been sourced from domestic and overseas suppliers with expected deliveries increasing sequentially during the latter half of the year. We are working to replenish system inventories in order to meet customer demand as soon as possible. Additionally, the company also experienced delays in certain ingredients, which impacted supply. Our depletions remain solid as do our measured market data, as previously mentioned on this call. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays for, timing of new product launches, and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production in some instances where our bottlers are responsible for production and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions, our new product innovation launches in those regions could be delayed. In conclusion, I would like to summarize some recent positive points. Currently, the company’s flavor manufacturing facilities, its co-packers, warehouses, and shipment facilities, and bottlers and distributors are all operating. We are continually addressing our aluminum can requirements, given our volume growth and the current supply constraints in the aluminum can industry. We are pleased with the new additions to the Monster Energy portfolio and are planning additional launches later in the year. We are planning to continue additional launches of our Reign Total Body Fuel high-performance energy drinks in additional international countries. We are pleased with the rollout of Predator and Fury and our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy drinks in a number of international countries during the year. I would like to open the floor to questions about the quarter. Thank you. Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question will come from Dara Mohsenian with Morgan Stanley. Please go ahead. Dara Mohsenian: Hey, guys. Rodney Sacks: Hey, Dara. Dara Mohsenian: Great top line growth in the quarter, but we have seen share losses in U.S. track channel data worsened recently. A, just short-term, how much of that do you think is attributable to out of stocks and the supply constraints that you mentioned? Is that a material factor in retail sales? And then maybe, B, from a longer-term standpoint, it has been a couple of quarters now where the share losses have reaccelerated year-over-year, just some progress in the beginning of the year. So, I was just hoping you could review some of the key factors that have been driving the share losses in the U.S.? And how you think about those factors going forward in terms of continuing or dissipating and how you guys are positioned? Thanks. Rodney Sacks: Hilton, if you take that, and I’ll also say something once you’ve… Hilton Schlosberg: All right. I think, Dara, what’s important is that, that’s not a result and not due to us not growing. We are not keeping up with our share, but our business is certainly growing. And you can track that from Nielsen. You can also track that from the non-measured channels, which are growing really very nicely. So while we’re not keeping up necessarily with Red Bull in the major channels. As I’ve spoken on previous calls, Red Bull had a very large on-premise business, which has moved to off-premise and moved to off-premise during COVID. And that led to an acceleration in their share. However, we mentioned that we had and are continuing to sustain can issues and result in supply. And of course, that’s having an impact on the share numbers that you are seeing. So I think on balance, the business is growing. You’ve seen the results. It’s continuing to grow. And we are growing, but not at the extent of the market. I think with the full deck of cards, the situation may well be very different. But right now, we really are struggling with sufficient supplies of aluminum cans really to keep up with demand, which is, I suppose, a good position to be in. And on the other hand, is not such a good position to be in. The business is growing. And, that’s the message I want to leave you with and other investors. Rodney Sacks: I think in – I’ll just add two short points in that regard. I think what we’ve tried to do is to try and also basically focus on our faster selling and our larger SKUs, which has necessarily resulted in some of the smaller SKUs, which normally have their own traction and followers. So those haven’t got on to shelf. And then the one additional thing that I think that has negatively affected our distribution sales and distribution levels in the U.S. is labor shortages. And I think that what we’ve seen is that many of the bottlers, Coke bottlers are experiencing labor shortages. And while one would ordinarily say, well, everybody is going to have the same problem. I think that where you have Red Bull is our main competitor, they have a dedicated system. I think they’ve been able to address their labor shortages just more effectively than the larger bottlers with large labor pools. And that has also, I think, detrimentally affected our distribution levels going forward. But again, I think those are things that once things start settling down and things will get back to normality, that’s something that I think that will also, in due course, right itself. Hilton Schlosberg: Yes, I think we should also – Dara, I think we should also add that what we’re seeing with cans is something that will persist through this year. I’m a bit more optimistic about the fourth quarter because we have two new can suppliers coming on board. But the situation will persist. And then make sure, we should be in – we believe we’ll be in very good shape. But again, it all depends on consumer demand, which is growing, and you’ve seen that month-by-month and quarter-by-quarter. Operator: And the next question today will come from Bonnie Herzog with Goldman Sachs. Please go ahead. Bonnie Herzog: Thank you. Hi, everyone. I just wanted to ask about your gross margins. Clearly, they continue to be pressured as broadly expected, which you guys have been discussing with us. But just want to get your outlook for these pressures in the back half of the year? Hilton, you just mentioned that you’re optimistic. So just wanted to verify that you still expect some of these pressures to ease by Q4? Or do you think it’s going to take a little bit longer, especially in light of the recent spike in aluminum prices. So trying to understand how that factors in? And then just a clarification on the can shortages that you mentioned that you’re still experiencing, I guess, it sounds like it’s getting worse, but I really did want to clarify that. And is there any way that you guys could quantify how big of an impact the supply shortages had on your top-line either in the quarter or in July? Just trying to understand how much you think your shipments would have been up in July without these shortages, for instance? Thanks. Hilton Schlosberg: Okay. So let me deal with the first issue first, if I may. I spoke about optimistic about can supplies. I really didn’t talk about margins. You’ll recall on the last call, I spoke about the issues that we were confronting with margin pressures like most other beverage companies. And where we are right now with aluminum, I mean, nobody knows. So you can talk to the leading banks in the field, which we do on a regular basis, and they really are pulls apart about their projections for aluminum in 2022, let alone 2021. So the last couple of days, you’ve seen a spike in the Midwest premium from this tax that is expected to be imposed on Russian aluminum. And as you know, the Midwest premium is strongly factors the last ton of aluminum to enter the U.S. and the cost of that. And so we’ve seen a spike in the Midwest premium. And we continue to see spikes in aluminum. So from that score, I think we just are in uncharted territory. I’ve been in this business for a long time, as you know, and I’ve never seen aluminum where it’s at right now. And I’ve never seen the Midwest premium at these kind of levels. So aluminum, I really cannot talk about. And also when you look at our business and you look at the factors that really have affected gross margin, number one, the fact that we’re selling a lot more internationally. So I talked earlier about 37.4% of our sales in the quarter outside of the U.S. 30% last year, that obviously impacts margins. We are importing cans from a number of countries that obviously impacts margins. In fact, the China and India cans that we are using in the United States and in EMEA will only be filed in August and July, and they will be filled this month, so that in itself, the imputation will impact gross margins. And then to cap everything else, we have ingredient issues. We had ingredient issues, as we mentioned, in July, which again reduced the amount that we would actually sell because we didn’t have sufficient ingredients to meet themselves, particularly with NOS. And so there are a number of factors that are increasing our cost of goods. And last quarter, I said I didn’t think that margins would get better in the second and third quarters. I read they will not – I think margins will deteriorate in the third quarter. In the fourth quarter, we’re getting some relief in terms of supplies from the U.S. on cans that are – have been contracted for and they were contracted for two years ago. And we saw the opportunity to work with two major suppliers to get additional cans produced in the U.S., and that’s why we have two new supplies opening, and we are an important and an anchor customer of both those facilities. But even that, you’re still dependent on aluminum. We have some hedges in place, but obviously not enough to take into consideration the amount of sales and the amount of consumer demand that is out there. So that’s a long-winded way of saying, I think, answering your question and as best as I can. And then just getting to your second question, because you’re really only allowed one, but to get to your second question, we have quantified or try to quantify the impact on can shortages in July and in this quarter and in the – potentially in the third quarter, but I really don’t want to – I’m not comfortable with those numbers yet. A lot of detailed work is being done on them. And I just – I can’t in good contents give those numbers because we still are in the throes of kind of finalizing what we think is probably correct. Rodney mentioned in his script earlier that a number of the bottlers, he mentioned particularly in EMEA, but there were cases in the U.S. as well, and there was a substantial case in the U.S. where the bottlers were obviously focused on other things in the quarter and were producing Coca-Cola brands. And as a result, I think we – our production got moved from July to August, so when I look at July, it doesn’t – I don’t get overly concerned because I know the sales are going into August. Rodney Sacks: Perhaps, if I just on the shortage level, just to add that when we buy cans in contracted for our annual amount, they usually are sort of reasonably flat line across the year. And we used the first half of the year to build up can inventories and finished product inventories with ourselves and our bottlers. Earlier this year, obviously, demand sort of was strong, and so we really didn’t have that opportunity. So what has happened is that in June and July, which is your normal peak months, the demand has been higher, but our supply has been more level until we can get more can inventories into the market. So what happened is just that we have had a sort of a heartened increased shortage in the last month and July and probably will be a little bit in August. And then obviously, as we start increasing our – the cans we’re getting in, and then we’re able to balance it more and our demand balances more, we’ll start to have less of a different delta between these demand and supplier and eventually be able to – we’re hoping to able to build up our inventories and supply back to normal by the end of the fourth quarter or during or by the end of the fourth quarter. Hilton Schlosberg: Yes. No one’s comfortable with the level of finished goods inventories that we’re running at, but it’s a sign of the times. I mean, we’re doing everything we can to supply our customers. And that’s why we spoke about freights. Freight is a big issue, not only getting raw material ingredients into co-packing system and into our bottling system and – but also distributing from our co-packers. And obviously, the one goes into cost of sales and freight out goes into operating expenses. So that’s why you’ll see freight really hitting both of those line items. Operator: The next question will come from Andrea Teixeira with JPMorgan. Please go ahead. Andrea Teixeira: Hi. Thank you. Hi. Good afternoon. Rodney Sacks: Hi. Hilton Schlosberg: Hi, Andrea. Andrea Teixeira: How are you Hilton? Hi. Hilton Schlosberg: I’m good. Andrea Teixeira: Yes. Just on the gross margin, because your gross margin comments were very helpful and given this deterioration obviously that its probably here to stay in the next few quarters. How are you thinking about pricing? Obviously, you can’t supply the service levels that are used to with the retailers. So is that is something that takes – obviously, you have to take into account? Or perhaps as you get more informed on how the aluminum cost will evolve, you may contemplate it again? Hilton Schlosberg: Yes. With regard to pricing, we continue to evaluate pricing, honestly, on a very, very regular basis, if not weekly. So we continue to evaluate it, and we want to make a good decision. Last time around, as I mentioned on previous calls, we went out alone, and we would like to have been in a situation this time where we followed our competitor, but we have to evaluate, obviously, the business as we see it and the impact for us. What we’ve done is we’re reducing our promotional allowances. So we’re taking a price increase the other way, through reducing promotional allowances, but the impact of that reduction in the second quarter was not as we would have liked. So we are – we really put the accelerator down and are more aggressive in reducing our promotional allowances. But we are continuing to evaluate the pricing and price increases. And then I have to leave this call with my favorite saying, and that is, we don’t bank gross profit margins, we bank gross profit dollars. And to me, the fact that we’re doing everything we can to satisfy our customers as best as we can is impacting gross profit margins. But at the end of the day, we don’t want to lose gross profit dollars, which is really important to ensure the sustainability of the brand and that’s the most important thing for us right now. Andrea Teixeira: Thank you. That’s fair. Thank you, both. Rodney Sacks: Yes. Basically, just make it clear, at this point, we are watching and we’re not planning a price increase. So we’re not adverse to a price, but we’ll wait and see what the market does and what our competitors do. Andrea Teixeira: Thank you, Rodney. Operator: This will conclude today’s question-and-answer session. I would now like to turn the conference back over to management for any closing remarks. Rodney Sacks: Thanks very much. Thank you, everyone, for your continued interest and support of the company. We continue to believe in the company and our growth strategy to remain committed to continuing to innovate, develop and differentiate our brands and to expand the company, both domestically and abroad. And in particular, expand distribution of our products through the Coca-Cola bottler 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 near future. We believe that we are well-positioned in the energy drink category and will continue to be and are 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. Operator: The conference has now concluded. Thank you for attending today’s presentation. And you may now disconnect.

Operator: Good afternoon and welcome to the Monster Beverage Company’s First Quarter 2021 Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Rodney Sacks and Mr. Hilton Schlosberg, Co-CEOs. Please go ahead. Rodney Sacks: Thank you. Good afternoon, ladies and gentlemen. Thank you for attending this call. I am Rodney Sacks. Hilton Schlosberg, our Vice Chairman and my Co-Chief Executive Officer is on the call. As is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read the cautionary announcement. Tom Kelly: 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 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 March 1, 2021, 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. I would now like to hand the call over to Rodney Sacks. Rodney Sacks: Thank you, Tom. The company’s top priority remains the health, safety and well-being of its employees. The company’s flavor manufacturing facilities, its co-packers, warehouses and shipment facilities have operated throughout the COVID-19 pandemic. The company’s bottlers and distributors are operating and the company’s products remain generally available to consumers. In limited countries, the operations of the company’s bottlers or distributors have, in part be negatively affected for varying periods of time. Despite the ongoing impact of the COVID-19 pandemic, the company achieved record first quarter net sales. Currently, the company does not foresee a material impact on the ability of its co-packers to manufacture and its bottlers and distributors to distribute its products as a result of the COVID-19 pandemic. The company’s supply chain remains largely intact. However, the company is experiencing shortages in its aluminum can requirements in North America and Europe given the company’s volume growth and the current supply constraints in the aluminum can industry. The company has taken steps to source quantities of aluminum cans from South America and Asia. However, logistical issues, including ocean freight and port of entry congestion, could delay such supply. Logistical issues in relation to the importation of certain other raw materials and ingredients could impact future supply. Furthermore, we are continuing to experience freight inefficiencies and like other beverage companies are incurring increased aluminum can and other costs in the current environment. In the first quarter of 2021, net sales were $1.24 billion compared to $1.06 billion in the first quarter of 2020, an increase of 17.1%. Adjusting for foreign currency movements, net sales for the 2021 first quarter would have been up 16.2%. Gross profit as a percentage of net sales for the 2021 first quarter was 57.5% and compared with 60% in this 2020 first quarter. The decrease in gross profit as a percentage of net sales for the 3 months ended March 31, 2021 was primarily the result of increased input costs mainly increased raw material freight-in costs, geographical sales mix and higher promotional allowances as a percentage of net sales. Operating expenses for the 2021 first quarter were $300.8 million compared with $272.2 million in the 2020 first quarter. As a percentage of net sales, operating expenses for the 2021 first quarter were 24.2% compared with 25.6% in the 2020 first quarter. Operating income increased 13.5% to $414.1 million, up from $365 million in the first quarter of 2020. Net income increased 13% to $315.2 million as compared to $278.8 million in the 2020 comparable quarter. Diluted earnings per share for the 2021 first quarter increased 14.2% to $0.59 from $0.52 in the first quarter of 2020. According to the Nielsen reports for the 13 weeks through April 24, 2021 for all outlets combined namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 20.3% versus the same period a year ago. Sales of the company’s energy brands, including Reign, were up 17.2% in the 13-week period; sales of Monster were up 20.7%; sales of Reign were down 0.6%; sales of NOS increased 1.4%; and sales of Full Throttle increased 8.1%. Sales of Red Bull increased 27.9%; sales of Rockstar decreased by 11.9%; sales of 5-hour increased 11.6%; and sales of Amp increased 6.9%. VPX Bang sales increased 16.3% and Coca-Cola Energy sales decreased 59.3% with a market share of 0.4%. According to Nielsen, for the 4 weeks ended April 24, 2021, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars, increased 34% over the same period the previous year. Sales of the company’s energy brands, which include Reign, increased 27% in the 4-week period in the convenience and gas channel. Sales of Monster increased by 30.9% over the same period versus the previous year. Reign sales increased 13.4%, NOS was up 5.7%, and Full Throttle was up 17.2%. Sales of Red Bull were up 41.2%. Rockstar was down 9.9%, 5-hour was up 41.4%, and Amp was up 14.6%. VPX Bang sales increased 35.5% and Coca-Cola Energy was down 45.8%. According to Nielsen, for the 4 weeks ended April 24, 2021, the company’s market share of the energy drink category in the convenience and gas channel, including energy shots, in dollars, decreased 2.1 points to 37.4%. Monster share decreased by 0.7 of a share point to 31.2% and Reign’s decreased 0.5 of a share point to 2.6%, NOS’ share decreased 0.8 of a point to 2.8%, and Full Throttle share decreased 0.1 of a point to 0.7%. Red Bull share increased 1.9 points to 36.9%; Rockstar share was down 1.9 points to 3.8%; 5-hour share was higher by 0.3 of a point at 4.8%; and Amp share remained at 0.4%. VPX’s Bang share increased 0.1 of a point to 7.5% and Coca-Cola Energy share decreased 0.3 of a point to 0.2%. According to Nielsen, for the 4 weeks ended April 24, 2021, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel, increased 47.5% over the same period the previous year. Sales of Java Monster, including Java Monster 300, were 44.7% higher in the same period versus the previous year. Sales of Starbucks Energy were 53.8% higher. Java Monster share, including Java Monster 300 of the Coffee Plus energy category, which primarily includes Java Monster, Java Monster 300, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee for the 4 weeks ended April 24, 2021, was 51.1%, down 1 point, while Starbucks Energy’s share was 46%, up 1.9 points. According to Stackline, which tracks energy drink sales by Amazon in the United States for the 4-week period ending April 17, 2021, sales in dollars in the energy category by Amazon, including energy shots, increased 160.1% over the same period the previous year. Sales of Monster increased 163% and its share was 35.6%, up 0.4 of a share point versus the same period a year ago. Red Bull sales increased 135.4% and its share was 13.7%, down 1.4 points. CELSIUS’ sales increased 265.2% and its share increased 4.5 points to 15.5%. 5-hour’s sales increased 29.5% and its share declined 3.2 points to 3.1%. VPX Bang sales increased 306.4% and its share increased 1.8 share points to 4.9%. Reign share increased 0.2 of a share point to 5.1%, and Rockstar share increased 0.6 of a share point to 3.5%. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended March 27, 2021, the energy drink category increased 17.5% in dollars. Sales of the company’s energy drink brands increased 27.2% versus a year ago. The market share of the company’s energy drink brands was 42.1%, up 3.2 points. Monster sales increased 22.2% and its market share increased 1.4 points to $37.1 million. NOS’ sales decreased 4% and its market share decreased by 0.4 of a point to 1.9%. Full Throttle sales increased 0.2 of a percentage point and its market share decreased 0.1 of a point to 0.7%. Red Bull sales increased 24.8% and its market share increased 2.2 points to 37.7%. Rockstar sales decreased 17% and its market share decreased 4.2 points to 10%. Guru’s sales increased 12.8% and its share decreased 0.2 of a share point to 3.9%. Coca-Cola Energy sales increased 36.6% and its share increased 0.1 percentage point to 0.8%. According to Nielsen for all outlets combined in Mexico, the energy drink category increased 18.5% for the month of March 2021. Monster sales increased 19.3%. Our market share in value increased 0.2 of a point to 27.5% against the comparable period the previous year. Red Bull sales increased 17.6% and its market share decreased by 0.1 of a point to 6.8%. Vive 100 sales increased 1.9% and its market share decreased by 3.3 points to 20.3%. Vault’s sales increased 20.1% and its market share increased 0.2 of a share point to 19.1%, while Boost sales decreased 1.3% and its market share decreased 1.1 points to 5.6%. Amp’s sales increased 45% and its market share increased 3 points to 16.4%. Coca-Cola Energy sales decreased 94% and its market share decreased 2.1 points to 0.1%. Predator, which was launched in March 2020, achieved a market share of 2.7%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that maybe undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, for the month of March 2021 compared to March 2020, Monster’s retail market share in value increased in Argentina from 37.9% to 45.2% and in Brazil from 25.4% to 34.7%. In Chile, Monster’s retail market share decreased from 42.1% to 40%. Monster Energy continues to be the leading energy brand in value in Argentina. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide, because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the 13-week period ended April 4, 2021, Monster’s retail market share in value as compared to the same period the previous year grew from 15.8% to 16% in Germany, from 19.7% to 28.1% in Italy, and from 17.3% to 20.6% in South Africa. According to Nielsen in the 13-week period till the end of March 2021, Monster’s retail market share in value as compared to the same period the previous year grew from 13.2% to 15.1% in Belgium; from 12.6% to 14.8% in the Czech Republic; from 24.5% to 26.4% in Denmark; from 28% to 31.8% in France; from 22.7% to 27.9% in Great Britain; from 34% to 37.7% in Greece; from 6.4% to 8% in the Netherlands; from 24.7% to 29.1% in Norway; from 15.3% to 18.2% in Poland; from 23.8% to 28% in the Republic of Ireland; and from 34% to 36% in Spain; and from 13.5% to 14.9% in Sweden. The Nielsen numbers in EMEA should only be used as a guide, because the channels read by Nielsen in EMEA vary from country to country. According to IRI in Australia, Monster’s market share in value for the 4 weeks ended April 11, 2021 increased from 10% to 13.1% as compared to the same period the previous year. Mother’s market share in value decreased from 13.6% to 11.8% during the same period. The market share of the company’s brands in Australia for the 4 weeks ended April 11, 2021 increased from 23.6% to 24.9%. According to IRI in New Zealand, Monster’s market share in value for the 4 weeks ended April 18, 2021 increased from 9.9% to 12.7% as compared to the same period the previous year. Live+’s market share in value decreased from 7.4% to 6.5% and Mother’s market share in value decreased from 6.5% to 5.6%. The market share of the company’s brands in New Zealand for the 4 weeks ended April 18, 2021 increased from 23.9% to 24.8%. According to Nielsen, in South Korea, Monster’s market share in value in all outlets combined for the month of March 2021 increased from 52.3% to 54.8% as compared to the same period in the previous year. According to INTAGE in Japan, Monster’s market share in value in the convenience store channel for the month of March 2021 decreased from 62.1% to 50.1% as compared to the same period in the previous year. Monster remains the market leader in Japan. However, our share was negatively impacted by the labeling issue of a product referenced in our fourth quarter 2020 release, which was re-listed on retail shelves in April 2021 by the introduction of new SKUs by new competitor and by the timing of our 2021 innovation. We again pointed out that certain market statistics that cover single months or 4-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the U.S. was $459.4 million, a 36.9% of total net sales in the 2021 first quarter compared with $356.8 million and 33.6% of total net sales in the corresponding quarter in 2020. Foreign currency exchange rates had the effect of increasing net sales in U.S. dollars by approximately $9.3 million in the 2021 first quarter. Included in reported geographic sales are our sales to the company’s military customers, which are delivered in the U.S. and transshipped to the military and their customers overseas. In EMEA, net sales in the 2021 first quarter increased 27.7% in dollars and increased 21.2% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales in the first quarter was 37.3% compared to 43.1% in the same quarter in 2020 primarily... Tom Kelly: 41.3%, sorry. Rodney Sacks: 41.3% primarily due to unfavorable country and product mix. We are also pleased that in the 2021 first quarter, Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Greece, Italy, the Netherlands, Norway, Poland, the Republic of Ireland, South Africa, Spain and Sweden. In Asia-Pacific, net sales in the 2021 first quarter increased 24.8% in dollars and 17.4% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales, was 48.8% versus 42% over the same period in 2020. In Japan, net sales in the 2021 first quarter increased 9.2% in dollars and 4.1% in local currency. In South Korea, net sales increased 17% in dollars and 9.6% in local currency as compared to the same quarter in 2020. In China, net sales increased 59.4% in dollars in the 2021 first quarter and 48% in local currency as compared to the same quarter in 2020. In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 66% in dollars and 47.8% in local currencies. Sales of the Monster brand in Oceana increased 65.6% in dollars and 48.1% in local currency as compared to the same quarter in 2020. In Latin America, including Mexico and the Caribbean, net sales in the 2021 first quarter increased 35.7% in dollars and increased 55.9% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales was 37.9% compared to 42.5% over the same period in 2020 primarily as a result of foreign exchange rates as certain raw materials and ingredients for products in this region are purchased in U.S. dollars. In Brazil, net sales in the 2021 first quarter increased by 34% in dollars and 70.1% in local currency. Net sales in Chile increased 48.9% in dollars and 37.7% in local currency in the 2021 first quarter. Since our last earnings call in February 2021, there have been no significant updates on our litigation with Vital Pharmaceuticals Inc., the maker of Bang energy drinks. As this litigation and other pending proceedings with VPX are subjugate, we will not be answering any questions on this matter on today’s call. In the United States, during early January 2021, we converted our 10-pack Monster portfolio into 12 packs. In late January 2021, we launched Reign Cherry Limeade and Reign White Gummy Bear as well as Reign Inferno Watermelon warlord. We also launched Monster Ultra Gold in singles and in a 4-pack. In late February 2021, we launched four core flavors: Monster Green, Low-Carb Monster, Monster Zero Ultra and Monster Ultra Paradise in 12-ounce slim cans targeted to the convenience retail channel and food service channel. In late March 2021, we converted our entire Monster Hydro portfolio into 20-ounce PET containers and added 2 new Monster Hydro Super Sport SKUs, Kilo Kiwi and Macho Mango. In late March 2021, we also launched Rehab Monster Strawberry Lemonade as the first non-tea option in the Rehab Monster brand family. We refreshed 2 SKUs during the first quarter of 2021, Monster Max Super Dry into Monster Nitro Super Dry in a 16-ounce can as well as a refreshed design on Monster result. This summer, we are also planning to launch a new line of energy drinks under the True North brand name in 12-ounce sleek cans, which will contain an organic plant-based energy blend and ingredients for immunity support. Initially, True North will have a limited target in 2021, with plans for a full launch into mainstream channels in 2022. We are planning to launch additional new products later in 2021. In Canada, during early January 2021, we launched Monster Ultra Fiesta, Java Monster Oat Milk as well as Monster Ultra Paradise 4-pack. Later in February 2021, we launched Monster Ultra Paradise in singles as a 310 ml option. In early March 2021, we launched Reign Lilikoi Lychee singles and Reign Orange Dreamsicle in singles and a 4-pack. We also launched NOS Turbo in March 2021. In February 2021, we launched Pacific Punch in Mexico and in Honduras we launched Mean Green, our second flavor of Fury, which is one of our affordable energy brands. In March 2021, we launched Ultra Watermelon in Puerto Rico and Ultra Paradise in Aruba. We introduced a number of SKUs across EMEA in the 2021 first quarter. Highlights include the geographical expansion of a number of existing Monster Reign and strategic brand products into new countries, including Juice Monster Pacific Punch, Juice Monster Monarch, which is Papillon in non-EMEA markets, Juice Monster Mango Loco, Juice Monster Pipeline Punch, Monster Ultra Paradise, Monster Ultra Fiesta, Monster Zero Ultra, Monster Ultra Blue, Black Monster Ultra Sunrise in Russia, Monster Mule, Burn Zero Peach and Play Zero Peach. Various Reign SKUs, including Reign Melon Mania, Sour Apple, Razzleberry, Peach Fuzz, Orange Dreamsicle and Lemonades were launched in Belgium; the Netherlands, South Africa, Estonia, Latvia, Lithuania, Sweden and Germany in the first quarter of 2021. In January 2021, we launched Ultra Rosa market-wide in Australia, following an exclusive lead launch with one chain in the fourth quarter of 2020. In March 2021 in New Zealand, we launched Monster Super Fuel in both Purple Passion and sugar-free flavors. During the 2021 first quarter in Japan, we launched Monster Energy Super Cola with our distributor, Asahi Soft Drinks. Additionally, we began shipments in the quarter in Japan for the re-launch at retail of Ultra Paradise in April 2021. During the 2021 first quarter, we launched Pipeline Punch in Hong Kong and Macau and began distribution of Monster Energy Zero Sugar in the Philippines. We are planning to launch a number of additional products and/or market lines in our domestic and international markets later this year. During the 2021 first quarter, no shares were repurchased under the previously authorized repurchase program. As of May 6, 2021, approximately $441.5 million remained available for repurchase under the previously authorized repurchase program. We estimate April 2021 sales to be approximately 71.3% higher than in April 2020. On a foreign currency-adjusted basis, April 2021 sales would have been approximately 67.8% higher than comparable April 2020 sales. April 2021 had the same number of selling days as April 2020. Please keep in mind that the comparative April 2020 sales were materially adversely impacted by the COVID-19 pandemic. In our 2020 first quarter conference call to shareholders, we reported that April 2020 sales were 22.2% lower than our April 2019 sales, with the same number of selling days in both periods. In this regard, we are caution again that sales over a short period are often disproportionately impacted by various factors, such as, for example, selling days, days of the week in which holidays fall, timing of new product launches, the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production, in some instances where our bottlers are responsible for production and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales over a short period such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions, our new product innovation launches in those regions could be delayed. In conclusion, I would like to summarize some recent positive points. One, currently, the company’s flavor manufacturing facilities, its co-packers, warehouses and shipment facilities and bottlers and distributors are all operating. We are continually addressing our aluminum can requirements given our volume growth and the current supply constraints in the aluminum can industry. We are pleased with the new additions to the Monster Energy portfolio and are planning additional launches later in the year. Three, we are planning to continue additional launches of our Reign Total Body Fuel high-performance energy drinks in additional international countries. Four, we are pleased with the rollout of Predator and Fury and our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in a number of international countries during the year. Five, finally, please note that similar to last year in the light of the COVID-19 pandemic, we will conduct our annual stockholders’ meeting exclusively as a viral meeting via live webcast. Additional information regarding attending the annual meeting, voting your shares and submitting questions can be found in the company’s proxy statement. I’d like to open the floor to questions about the quarter. Thank you. Operator: [Operator Instructions] The first question is from Bonnie Herzog of Goldman Sachs. Please go ahead. Bonnie Herzog: Hi, everyone. Hilton Schlosberg: Hi, Bonnie. Bonnie Herzog: I wanted – hello. I wanted to ask you guys about the shortages of cans you’re experiencing. Could you give us a sense of how big of a driver that was of your gross margin contraction in the quarter? I mean was it the bulk of that, for instance? And I’m curious to hear if the situation has deteriorated further in April and May? And then finally, when do you expect the shortage situation to improve or maybe stabilize? I mean, I guess, trying to understand if we all should assume this will be a pretty big issue for the remainder of the year? Thanks. Rodney Sacks: Okay. So maybe I can get that, Bonnie. So what happened when we set our can requirements with our can companies about a year ago, we estimated that our sales would be 10% to 12% or up this year. In fact, as you can see, they are substantially above that. So whatever we contracted for, we’ve got. What happened with our sales in January and February, ourselves were doing okay. And then in March, they have spiked up. And as Rodney quoted, in April, they are spiked up yet again. So what we’ve done is we’ve procured additional cans from South America and from Asia that will start coming in late in the second quarter. We also have new can companies that are opening their doors later this year, and we will be drawing cans from those companies as well. So to answer your question about the first quarter, yes, there was an impact. And the big impact, as we mentioned, in the release and on this call is that the bigger impact was these freight in costs where we were drawing product, for example, from Canada, and we were shipping product from various locations to our distribution center that impacted cost of sales. We also had – we broke our orbits. In other words, we’ve always tried to manufacture and sell within regions to avoid excessive shipping costs. We had to break that this year to satisfy consumer demand and so that was another factor that impinged on the results. But the margin was impacted by – not only by those freight costs, but – excuse me, as we mentioned by the promotional allowances that were higher in the second quarter across the board. And also, from our geographical sales mix, because as you know, we sold a significantly higher percentage of product overseas than we did in the U.S. So it’s the same story that we’ve experienced and we’ve spoken to shareholders, the more we sell overseas, the lower is our gross margin percentage. But again, I must caution shareholders that we bank dollars, we don’t bank gross profit percentages. And in taking the decisions we took in the first quarter, it was important to do so to satisfy demand. We knew the profitability would be higher, but the percentage may, in fact, be lower, which it was. Operator: The next question is from Laurent Grandet of Guggenheim. Please go ahead. Laurent Grandet: Yes. Good evening everyone. And actually, I want to dig a bit more in what you’re just saying in terms of gross margin. So you mentioned freight, so I understand that’s the number one. The aluminum cans, you mentioned also, I mean, promotional activity. So if we were to put some numbers, it’s freight, 50% of the impact. I mean aluminum can and now maybe 30% and promotional activity, 20%. I’d like to basically understand this a bit better. If you can, give us an idea here, that would be great? Thank you. Hilton Schlosberg: So Laurent, we spoke about the first quarter. In the first quarter, the impact of the aluminum can costs were not a major factor. And as you know, and everyone else on the call probably knows as well that we have suffered significant and will set a significant increases in aluminum costs going forward. So for example, it’s no secret, but if you look back on a year ago, aluminum costs are up 83.6%, including the Midwest premium in the U.S., and they are up 71%, 71.1% in Europe. So as we go forward, we may not have some of the cost impacts on gross margin, but we certainly will have impacts on aluminum in the second and subsequent quarters. So for me to talk more about the first quarter, we don’t actually give the numbers out that you’re asking for. But what I can say is that I don’t expect the margins to improve going forward this year. I expect that we will not – that our margins will not improve as we go into the second, third. Possibly the fourth quarter, I think things will be better. That’s my analysis. But certainly in the second and third quarter, we will continue to suffer gross margin percentage in our stress gross margin percentage erosion. Operator: The next question is from Chris Carey of Wells Fargo Securities. Please go ahead. Chris Carey: Hi everyone. Hilton Schlosberg: Hi, Chris. Chris Carey: So obviously, a big – hey, so obviously, a big number quarter to-date. And I guess the question is, with the aluminum supply shortages that you have, are you going to run into some issues with the ability to fill that demand? And could that prevent you from doing some things that might help with your gross margin, which sounds like they could improve by Q4, like taking any pricing in the business? Hilton Schlosberg: So that’s obviously something that we’re very aware about on pricing. I know what some of our competitors, some of the big beverage companies have spoken about with regard to pricing. But I’m not sure that we would take – move ourselves. Last time we went ahead and did it irrespective of Red Bull’s strategy with regard to pricing. They – I think this time around, we’re examining what they will be doing. Remember, they are importing a substantial amount of their cans and product from overseas. So we will be watching that. But there are other ways to take price up, for example, we can reassess, which we are doing, structure of promotional allowances to move margins in a more positive direction. But again, we don’t want to disturb the business that is doing very well. Our share is – we’re happy with where the business is going. We’re happy with our share, and we know when to disturb what we already have. So we bring in cans from abroad, as I said, we’re getting new cans in the system later on in the year. And as far as we’re concerned, we will continue to examine the opportunity to take price. And if necessary, as I’ve said, we’re looking at on our promotional allowances as well. Operator: The next question is from Andrea Teixeira of JPMorgan. Please go ahead. Andrea Teixeira: Hi, thank you, and good afternoon. On the True North Organic Energy launch, should we assume that the impact will be mostly concentrated in the second half, and particularly in 2022? And does that mean you have decided to remain in non-alcohol segment and you’re not launching a hard seltzer for now? And then hit on the gross margin, and I appreciate your commentary maybe perhaps we should assume that it may get worse before it gets better, given the freight and aluminum have actually been sequentially worse? Thank you. Rodney Sacks: Perhaps I’ll take the part of it, and Hilton can take part of it. On True North, we are, as I indicated, we are going to have limited sales just going into and seeding the market this year. The full launch and rollout will take place early in – from the beginning or early in 2022. So it will – we think it will have an impact in 2022, and we will have much less of an impact this year. Hilton Schlosberg: Okay. Andrea, you were talking about margins. As I said, I don’t think margins will get better in the second and the third quarter, margin percentages, but with robust sales which is obviously something that we’re looking at in terms of our own forecasting, although we don’t give guidance, we must look at the bottom line, and we must not necessarily look at percentages. Because what we have to do as part of our everyday function is to satisfy the demand of our customers because the last thing we want to do is to have our bottlers on the line without inventory, our consumers gravitating to other products. And we have to maintain the status quo. The company is doing really well on the top line. And we, hopefully, will continue to do so. Rodney Sacks: Yes. Just – and then just to complete your question with regard to the alcoholic CELSIUS side. I don’t think you can assume that we are going into it or not going into it. Don’t make that assumption. We’ve addressed the nonalcoholic sell some market. We’ve decided a strategy, and we’ve developed products. And align, and we are going to launch that line. As regards to alcoholic sensing, we are still looking at the market. I think if you have been watching the market, I’m sure the analysts have been. I think you’ve seen quite a lot of – a fortune of new products being launched, many – in cases from the same companies, just different variants. Throwing them against the wall and seeing what’s going to stick. What you’ve also seen in the last 3 months, what we’ve noticed is quite a falloff in the rate of increase in the category. And as the category is maturing, so the increase is also tempering. So we are involved in looking at that category in developing products and as I think I’ve said in the last call, we simply don’t want to launch a product. That’s me-too and that follows everyone else. It’s just no point in that and taking the time and effort and detracting from our focus on our core energy brands and portfolio, where we get a better return and have, obviously, it’s much easier for us to get meaningful sales. But we are continuing to monitor the alcoholic energy seltzer category. And we may well do something in that. But how we do it and what we do it is still not being determined and still not – we don’t have a firm direction. So, all I can really say is just that we are addressing it, but we shouldn’t assume that we are definitely going to go ahead or definitely not going to go ahead or how. Operator: The next question is from Mark Astrachan of Stifel. Please go ahead. Mark Astrachan: Yes. Hey, thanks, and good afternoon everyone. I guess, don’t kill me I am going to ask a bunch of it for follow-up questions here so helping restrain yourself for a second. Hilton Schlosberg: Sure. Mark Astrachan: I guess on – are can shortages impacting your U.S. market share, if not, or if they are, could you maybe just talk about kind of what you’re seeing in the U.S. also, could you clarify on the gross margin you’re talking about relative to 1Q levels for 2Q and 3Q? Or are you talking about – you’re not giving us any sort of color on 2Q and 3Q relative to 1Q? And then back to the other question on pricing and then related to promotional allowances. So your capacity constrained, at least for the time being, what’s the harm in taking price to constrain the demand and then also, you’re suggesting then the promotional allowances after 1Q will lessen in 2Q, 3Q kind of for the same effect? Hilton Schlosberg: Okay. So where do you want me to start? So I think it is fair to say that out of stocks have impacted share. I don’t know how big that impact is. And I’m not going to because honestly, we don’t know. But what we do know is that Red Bulls on-premise has moved into the measured channels. There is no question about that. I think we underestimated the impact of their on-premise business moving into major channels. However, our share is doing nicely. Our sales are growing very nicely. And frankly, we are selling everything that we can make. And what you guys are not seeing or not addressing is things like Amazon. We spoke about the Stackline data and our other unmeasured channels, for example, the Home Depots and the Lowe’s and the home improvement stores and all those other parts of the business that are very strong for us are continuing to grow and continue to gain share in those particular channels. So overall, I think we are satisfied with where we are, as I said earlier. And we’re anticipating that as soon as we they can start coming to the U.S., and we start being in a more orderly situation that we will continue to grow again as we anticipate. So that was one question. Your second question was on margins. And I think I said that I expect my personal view, and this is not guidance, but I expect margins to get worse in the second and third quarter before they get better. So that’s my answer to that. Mark, just remind me, what are your other questions? Mark Astrachan: Pricing and promotional allowances relative to capacity constraints. Hilton Schlosberg: Okay. I think pricing, I said to you, we’re continuing to evaluate. And we’re doing this on a honestly, on a daily basis. We would like Red Bull to lead, but if they don’t lead, we will make a decision as to where we should or shouldn’t go with regard to pricing. With regard to promotional allowances, that is correct. We will – we are putting back promotional allowances, and you should see – we should see some impact in future quarters. Operator: Next question is from Dara Mohsenian of Morgan Stanley. Please go ahead. Dara Mohsenian: Hey, guys. So just one quick clarity question and then one broader question, just – it does sound like there is a little bit of demand impact from the lack of full supply on the aluminum side. Are you expecting that to be a significant issue in Q2 before it gets better and you get some of this incremental supply in, just trying to understand that in the short-term? And then just a broader question, we’ve obviously seen an acceleration in U.S. energy category growth the last few quarters after the initial weakness for a few months post-COVID. Can you just review what you think the key factors have been behind that acceleration in U.S. category growth? How sustainable they are going forward as we sort of look to that cycling that higher category growth in the back half of the year? Thanks. Hilton Schlosberg: So maybe I’ll just take the first one, and then we will get Rodney to take the second one. So Dara, if you look at April sales, for example, and you take out – you strip out what happened in 2020. And you can see that there was a very big impact in sales in the second quarter and a very positive impact. So it is presenting challenges to the supply chain team, and we are doing everything we can to ensure that we’re able to keep as much as possible in stock. In fact, we’re focusing on the SKUs that are generating the significant part of our volumes at the expense of SKUs that are not performing as well. So that’s really where we’re at with regard to the second quarter. We will be getting cans in. If these port issues resolve themselves, and we will – we’re trying as best as we can to get back in stock as soon as possible. A - Rodney Sacks: Yes. Just to – just add – just one thing. The uncertainty that we’ve got is, obviously, for cans that we’re importing, we are also incurring freight costs above the aluminum cost or can price. So that’s why those costs will go up the shorter term. As the additional plants in the U.S. come on stream, we will get back to a more normalized pricing structure for cans and get the additional volume. So it’s a little difficult now to predict exactly where we’re going to go on a month-to-month or quarter-to-quarter basis, but we think it will normalize, as Hilton said, towards the fourth quarter. With regard to the increased category, I think we’re already in a world of just unknowns. The category had a really steep hit rewards in late March, early April last year. Different in different parts of the world, when a lot of the bottlers literally took their staff and people teams out of the markets. But it has come back and the growth has come back really, really nicely. And so one of the things that we were – which were sort of unusual, we found that the growth was generally, historically has always been led by the convenience channel at a higher rate than the mainstream grocery and drug channels. And that sort of reversed itself with COVID. So again, you’re looking at factors that are just not normal. What we have seen, as you can see from the last 4 weeks numbers, we quoted in Nielsen from convenience, that started to pick up again quite nicely. So again, we’re in a very uncertain period because of what happened last year and your comps on last year. But even if you look at the 2-year stack sort of set of numbers, you’re getting some healthy growth back, where the category had slowed a little bit towards the end of ‘19, the growth was – they were still growing a bit slower. So we think that we will see continued growth regardless of how we come out of COVID and how our people come back into the markets. And we are hopeful for that. But again, it’s – we just can’t predict that at this stage. Our numbers are good. The numbers are strong. And Red Bull’s numbers have been strong again, a little bit, we think, skewed by the switch from on-premise to off-premise, but continue to grow. And obviously, we are the main players in the category. And so, the category growth is driven by our – respectively, by our two brands respective sales. So I think it all goes well for us, but we just don’t have any – I can’t give you any further color on it because we would be guessing, I think we all are. Tom Kelly: Yes. So the only thing I would add to that is that I always look at the first quarter of 2020 because that was kind of a pure quarter for us. COVID started kind of late in the quarter, where our sales were already in-house. And so the first quarter for us was really 2020 was really kind of a normal quarter. And if you look back to that first quarter, and I always do. First quarter net sales in 2020 over 2019 rose 12.3%. So even as we entered into COVID, our sales were strong. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Sacks and Mr. Schlosberg for closing remarks. Rodney Sacks: Thanks very much. 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 it’s 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 near 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 all stay safe and healthy. Thank you very much for your attendance. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.