Monster Beverage Corporation (MNST) Q1 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to your Monster Beverage Corporation First Quarter 2012 Financial Results Conference. [Operator Instructions] And as a reminder, today's conference is being recorded. And now I would like to introduce your host for today, Rodney Sacks, Chairman and CEO.

Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, Vice Chairman and President is with me, as is Tom Kelly, our Senior Vice President of Finance. Before we begin, I would like to remind listeners that certain statements made during this call may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended; and Section 21E of the Securities Exchange Act of 1934, as amended; and which are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance and trends. Management cautions that these statements are based on our current knowledge and expectations, and are subject to certain risks and uncertainties, many of which are outside the control of the company that may cause actual results to differ materially from the forward-looking statements made during this call. Please refer to our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed on February 29, 2012, and our most recent 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. An explanation of the non-GAAP measure of gross sales and certain expenditures, which may be mentioned during the course of this call, is provided in the notes designated with asterisks in the Condensed Consolidated Statements of Income and Other Information attached to the earnings release dated May 9, 2012. A copy of this information is also available at our website, www.monsterbevcorp.com, in the Financial Information section. The beverage industry generally appears to have improved in the first quarter of 2012, as evidenced by the positive results recently reported on by the major beverage companies. The consensus appears to be that the macroeconomic environment in the United States is improving, which is consistent with our experience in the first quarter. We are pleased to report yet again another record first quarter with gross sales up 26.9% to $517.3 million. Net sales up 27.5% to $454.6 million and operating income up 42.8% to $126.3 million. Diluted earnings per share increased 39.7% from $0.29 per share in the first quarter of 2011 to $0.41 per share. According to the Nielsen report, for the 13 weeks through April 21, 2012, for all outlets combined, namely convenience, grocery, drug and mass merchandisers, excluding Wal-Mart, sales in dollars in the energy drink category, including shots, increased 17.6% versus the same period a year ago. Sales of Monster grew 26.2% in the 13-week period while sales of Red Bull increased by 20%, sales of Rockstar increased by 17.2% and sales of 5-Hour increased by 6.9%. Sales of Amp decreased 0.1 of a percent. Sales of NOS increased 10.2% off a low base and sales of Full Throttle decreased 0.9%. According to the Nielsen reports, for the 4 weeks ended April 21, 2012, sales of energy drinks in the convenience and gas channel, in dollars, increased by 19% over the comparable 4-week period in 2011. Sales of Monster increased by 24.9% over last year, while sales of Red Bull increased by 23.1% over last year. Rockstar was up 14.2% while 5-Hour was up 10%. According to Nielsen, for the 4 weeks ended April 21, 2012, Monster's market share of the energy drink category in the convenience and gas channel, including energy shots, in dollars, increased by 1.4 points over a year ago to 30.5% against Red Bull's share of 32.4%, Rockstar's share of 9.4% and 5-Hour's share of 10.7%. According to Nielsen, in the 13 weeks ended April 21, 2012 for all outlets combined, sales of energy plus coffee drinks, in dollars, increased 22.7% over the same period last year. Java Monster was up 23% higher than last year and Starbucks Double Shot Energy was up 27.2%. Sales of our new non-carbonated Monster Rehab tea + energy line, the first SKU of which was launched back in the first quarter of 2011, continues to accelerate. In the first quarter of 2012, we launched our first SKU in the Monster Rehab line namely tea + orangeade + energy, as well as our Übermonster energy drinks in glass bottles. Monster's market share and sales in Canada continued to improve. According to Nielsen, in the convenience and gas channel in Canada for the 12 weeks ended March 10, 2012, the energy drink category grew 11%. Monster sales increased 12% and our market share increased 0.1 points to 24.5%, while Red Bull sales increased 8% and its market share decreased 1.1 points to 36%. Rockstar sales increased 43% and its market share increased 3.7 points to 16.6%. We believe that Rockstar's numbers in this period in Canada was skewed due to the inclusion of sales of its Rockstar Recovery line this year, which were not in last year's numbers and as well as due to deep price promotions implemented by Rockstar in the first quarter of 2012. According to Nielsen, in the 4 weeks ended March 31, 2012, sales of energy drinks in Canada across all market channels grew 12.5%. Over this period, sales of Red Bull increased 13.9%. Sales of Monster increased 17.4% and sales of Rockstar increased 20.2%. According to Nielsen, sales of the energy drink category in Mexico, in March 2012, were 5.6% lower than in the same period last year. Monster's market share in Mexico, in March 2012, increased by 1.2 points to 35.7% over the same period last year, which includes Java Monster, compared to Red Bull's share at 36.7%, although sales of Monster in Mexico were 2.2% lower than last year versus sales of Red Bull, which were 22.9% lower. Net sales for the company's DSD segment increased 28.8% to $431.2 million for the 3 months ended March 31, 2012, from $334.7 million in the same period in 2011. And contribution margin increased 35.4% from $110.1 million to $149.1 million. Net sales for the company's warehouse segment increased 8% to $23.4 million for the 3 months ended March 31, 2012, compared with $21.7 million for the same period in 2011. And contribution margin increased $2.2 million this quarter versus a loss of $0.3 million for the same quarter last year. For the 3 months ended March 31, 2012, gross sales to retail groceries, specialty chains and wholesalers represented 4% of gross sales, down from 5% in 2011. Gross sales through club stores, drug chains and mass merchandisers represented 10% of sales, the same as in 2011. Gross sales to full-service distributors represents 65% of sales, also the same as in 2011. Gross sales internationally increased to 19% from 18% in the same period of 2011. Other sales were 2% for the period, the same as 2011. Gross sales to customers outside the United States in the first quarter of 2012 amounted to $100.6 million compared to $72.8 million in the same quarter in 2011. Included in such sales were sales to the company's military customers, which are delivered in the United States and transshipped to the military and their customers overseas. Net sales in Europe, Middle East and Africa in the first quarter of 2012, in dollars, were 53.3% higher than in the same period last year. Monster is continuing to gain momentum and market share in Europe. Western Europe continues to operate profitably and operating income improved over the same period last year. We are continuing with our expansion strategy into new international markets. We launched Monster Energy in Poland in the first quarter of 2012, and retail sales of Monster Energy commenced in Hong Kong and Macau in April 2012 and in Japan and Ecuador earlier this week. We are planning to launch Monster in Chile, Peru, Philippines, Singapore and Taiwan, as well as additional countries overseas later in 2012 and in Argentina early in 2013. We're also planning to launch Monster in additional countries in Central and Eastern Europe later this year. Our planned launch of Monster in Korea in April was delayed due to product approval issues, which we are addressing. We believe that these issues will be resolved shortly and we will be able to proceed with the launch of Monster in Korea, early in the second half of 2012. Sales of Peace Tea, ready-to-drink iced teas, continue to meet and, indeed, exceed our expectations. In the first quarter of 2012, gross sales of Peace Tea increased 86.4% over the same period in 2011. We recently launched 3 new line extensions, namely, Cranberry Iced Tea, Pink Lemonade + Tea and Texas Style Sweet Tea to replace certain SKUs that were soft. We are continuing to build distribution and sales for Worx Energy. Gross profit margins achieved in the first quarter of 2012 were 53.1% versus 52.1% in the comparable quarter in 2011. The increase in gross profit as a percentage of net sales was partially attributable to increased operating efficiencies, product mix and the decrease in certain product costs. Gross margins achieved for international sales, other than those sold from the United States, were lower in the first quarter of 2012 than in the comparable quarter in 2011. Although we have covered a large portion of our anticipated requirements for aluminum cans in 2012 and a portion of our anticipated requirements for apple juice and sugar, we did experience some increases in raw material cost in the first quarter of 2012 and expect to continue to experience limited increases during the remainder of the year. However, we do not believe that if current levels increases in cost of raw materials will have a material negative effect on our margins. Distribution expense as a percentage of net sales in the first quarter were slightly higher than the same period in 2011. Selling expenses, as a percentage of net sales, decreased to 12.3% from 13.7% in the same period in 2011. The decrease in selling expenses as a percentage of net sales was primarily attributable to decreases in advertising, primarily for Worx, and commissions, which was partially offset by increases in sponsorships, the cost of premiums and GDMs in the first quarter of 2012 as compared to the same quarter in 2011. As previously reported, we are continuing to invest in the Monster brand internationally, in Europe, Middle East, Africa, Australia and South America, particularly, through trade development programs to support our distribution partners' respective sales forces, to service and merchandise the small independent store channel. The cost of product sampling teams and training development personnel are included as part of our selling expenses and do not form part of our payroll costs. General and administrative expenses, although higher in dollars, decreased marginally as a percentage of net sales in the quarter. The increase in general and administrative expenses was primarily attributable to increased payroll expenses and, in particular, increased cost of stock-based compensation. As previously reported, we are continuing to hold discussions with our distribution partner in Central and Eastern Europe to more equitably allocate the value chains in various countries between us. We believe that successful discussions combined with reduced operating cost per case should enable us to achieve improved operating results in 2012, in Central and Eastern Europe. However, we have to date not been able to arrive at an acceptable agreement with this distribution partner. Beginning the 2012 second quarter, we have managed to reduce certain operating costs in Australia and have limited our spend on commercial costs with our Australian distributor. As a result, we are hopeful that we will be able to achieve improved results in Australia in 2012 and beyond. Operating income was negatively affected by combined operating losses of $4.3 million for the quarter ended March 31, 2012, from our operations in Europe, the Middle East, Africa, Australasia and South America, as compared to $3.2 million for the same period last year. The increase in which was attributable to Australia, Eastern Europe and our expansion markets. Our effective tax rate in the 2012 first quarter was 39.9% compared with 38% in the 2011 first quarter. The increase in the 2012 first quarter effective tax rate was primarily the result of establishing a full valuation allowance against the deferred tax assets of a foreign subsidiary during the 3 months ended March 31, 2012, and tax rate differences between the different jurisdictions on certain intercompany charges. Turning to the balance sheet, cash and cash equivalents amounted to $391.4 million compared to $359.3 million at December 31, 2011. Short-term investments were $419.6 million compared to $411.3 million at December 31, 2011. Long-term investments comprise the entirety of auction rate securities decreased from $23.2 million at December 31, 2011 to $21.9 million. Trade accounts receivables are now presented on a gross basis as our promotional allowances owed to those customers, that the company does not allow net settlement, such as our full-service distributors. We continue to present that portion of the promotional allowances owed to those customers that the company allows net settlement on a net basis. On such basis, trade account receivables increased to $255.7 million from $218.1 million at December 31, 2011. Days outstanding for receivables, consistent with the above treatment, were 44.8 days at March 31, 2012 and 42.4 days at December 31, 2011 compared to 48.4 days at March 31, 2011. As sales outside United States continue to increase as a proportion of our overall sales, days outstanding for receivables are expected to increase due to the different terms generally granted to customers internationally in accordance with local practices in their respective countries. Inventories increased to $179.1 million from $155.6 million at December 31, 2011. Average days of inventory was 75.5 days at March 31, 2012, which is higher than the 71.6 days of inventory at December 31, 2011. At March 31, 2012, the company held auction rate securities with a face value of $29.1 million, $44.8 million at December 31, 2011 with an amortized cost basis of $21.9 million. Gross sales in April 2012 were approximately 39% higher than in April 2011. This includes opening shipments, through established inventory, in Japan. Excluding Japan, sales are approximately 53% above last year. We're encouraged by the continuing a strong sales that have been experienced by the company. We caution, again, that sales in a single month and over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week for which holidays fall and the timing of promotions in retail stores, and should not necessarily be imputed to or regarded as indicative of results for the full quarter or any future period. During the 2012 first quarter, the company did not repurchase any of its shares. I'd like to open the floor to questions. Thank you.

[Operator Instructions] And we'll take our first question from Alec Patterson from RCM.

Just a couple of quick ones. One, when you were referencing the $4.3 million loss. I just want to make sure, we're talking about essentially all geographies outside of North America and Mexico?

Not Mexico. It's all the other geographies -- it excludes Canada and Mexico.

Okay. And do you by chance, by now, have any market share data for at least Western Europe?

We do. I don't have it handy at the moment, the most current information. It hasn't come through to me. I'm expecting it later this week.

And then just lastly, Rodney, the cash keeps kind of piling up. I know you've been in the market on occasion for the stock. Have you given any further thought to other uses of cash, in terms of returns to shareholders or other uses at this point? What's kind of the thinking, dividend, et cetera, in terms of the mix of thoughts?

Alec, this is Hilton. We have been considering various options and we will proceed with our discussions in that regard.

More to come, is what you mean?

Yes.

[Operator Instructions] We'll open up our next question from Alton Stump from Longbow Research.

Did you say, Rodney, that uncontrolled sales were up 53%, is that what you said for April?

That is true -- no, no. 53% is international sales and the sales for April was $39 million, including the sales to Japan and $33 million, if you exclude the sales to Japan.

Okay. As an overall company, what were sales up, sorry, in April?

Sorry?

As an overall company sales number, what were they up in April?

It was 39%.

Okay, 39%. With that number, obviously, that's a pretty big acceleration from the growth that you saw in the first quarter. I know you mentioned that after one month can also differ, after various factors, but is there any single factor or 2 that you can point to that drove that acceleration in April?

I think again you need to take the opening sales to Japan out, and then the number is $33 million, which is a little higher than the average in the first quarter. But again, all I can really point to, all the quantifications that I gave in my remarks earlier, that it is one month and it has to be taken as one month. Really, one month doesn't make a summer.

And we'll take our next question from Marcus Astrachan of Stifel, Nicolaus.

Housekeeping. Rehab and Java Monster sales in the quarter, what were they?

I will try and get indication of those figures for you. I will come back to that.

All right. Yes, I guess, just on an overall basis, you look at across the country and it seems like you guys, the category maybe has been focusing a bit more on promotions in terms of 2 for $4. I guess, I'm just curious, how much of that do you think has contributed to this surge in overall category growth and obviously, within your business, in particular, but are you concerned that the consumer gets overly reliant on that, do you think it's actually a good thing for the category?

I don't believe it is that prevalent. There is -- there are promotions, I just don't have a feeling that it has been so extraordinarily, that's it's really even something I am been really conscious of. I'm really not in the position to quite -- really haven't really featured on our radar screen as positive, negative or anything of importance to be really looking at, and we haven't done. So I really am not in a position to really talk without speculating.

We have always done promotions, Mark. I don't see it as being more prevalent than in the past.

So you guys haven't stepped up any sort of promotions and the categories are just doing better.

I can't give you an analysis, an exact -- it's not an exact science but when I look at our average pricing, for example, in convenience of the general Monster, it's $0.02 lower, which to me it doesn't indicate any sort of major change or over-promotion at all. Going back to the -- just looking at our off-invoice numbers as well, just trying to get a better handle on that, again, comparing to the last quarter of last year, it's really very much in -- almost similar in numbers and it's lower than the third quarter of last year, which was summer. But they are lower. So there's nothing that's extraordinary. Just going back to the Rehab, your questions on Rehab and Java. These are gross numbers, I don't have net at the moment, but the gross numbers were approximately $28 million in the quarter for Java and $45 million for Rehab.

And we'll take our next question from John Faucher of JPMorgan.

Two questions here. First up and I realize this is an inexact science so, using the international numbers and the total company numbers, I backed out to sort of U.S. growth in the 30% plus range for April, does that seem correct? And then you kind of snuck in the very last sentence in the prepared remarks that you didn't buy back stock in the first quarter. Can you give us an indication in terms of why that was?

It wasn't snuck in, it was...

There was no elaboration on it. It was the very last comment and then, okay, let's go to questions.

We just didn't. And I don't think that there's anything that I really would care to discuss, but there's nothing to discuss. We just looked at it, we looked at the shape, the performance of the company and other things we are occupied with. And we just didn't -- decided to not to buy back stock in that period and didn't do so. We're sort of evaluating a number of alternatives about, with regard to what use we want to make of that cash and so we just didn't buy back stock. So there's really nothing more I can really elaborate on that.

Okay. So nothing in terms of whether there was legal issue or a valuation issue or anything like that?

No.

Okay. And then the first question was sort of U.S. 30% plus in April, does that sound about right?

It's probably in that region but that is a very -- just I'm sitting here without all the facts in front of me that's probably [indiscernible] that region.

Understandable. Okay, great.

And we'll take our next question from Judy Hong from Goldman Sachs.

Rodney, on Rehab, so you're going to start to lap the launch last year, so I just curious what you're kind of seeing on that brand, first, from ACB perspective. It looks like it's running around 84%, 85% based on our data versus the core Monster Green kind of 95% plus. So when do you think you can sort of get to the core Monster ACB for Rehab and do you sense that you are actually attracting new users into the category and with other new SKUs that you've launched more recently? What sort of traction are you getting from additional shelf spaces, additional doors and some of the stores?

Judy, the Rehab numbers, our distribution that I got for Rehab in convenience is up to about 81%. It's sort of been sticking at that level for the last quarter. Absolutely Zero, which we introduced before Rehab is about the 78% mark. So there is opportunity to expand it but, again, it's not the core so it actually becomes a little harder to, for whatever reason, to get it above those levels. So that's really where we are. So we do have an opportunity to, obviously, still increase but it may -- I'm looking at the graph and it sort of is flattening a little bit. So it is probably just a little harder to get that sort of 90% distribution level for your third and fourth and fifth SKU, when you do have quite have a selection. So obviously, it depends on sometimes there just isn't enough shelf space allocated. In the biggest stores, you've got 3 shelves or 4 shelves, I'm sure you can get a lot of -- in it. It's a lot easier. In some small stores, we they -- 1 or 2 shelves, the guys are going to make a choice because we have a big, basically, portfolio in the Monster range and I'm just seeing that it's sort of at that 80%, 81% level in the 3 months. Obviously, we're going to look to try and increase it. But that is where it is at.

Okay and then, internationally, so in April you said Japan's expansion added about 6 points to your sales growth. It sounds like that's a pretty big number for one market. So can you kind of frame for us, I mean, is Japan, just given the size of category of a pretty big market that you needed to see that sort of step up in terms of expansion? Can you just give us some flavor of why that number was pretty big?

I think the reason is that the distribution partner and as in line with traditional -- Japanese tradition, they are very precise in their analyses of the market, what is the potential. There is -- we're producing the products here so there's a long lead time to produce and ship it and have it examined, and checked and inspected and they're very, very -- it's a very pedantic, very slow exercise. So there was a large opening order placed in order to ensure that sufficient inventory was on hand in Japan and available, with back-up inventory, et cetera. The other thing is that, in Japan, they are very efficient. Literally we sold, yesterday, for the first day, and we literally have 90% distribution in almost all of the convenience chains there, literally within the first day. That's something that, in the most efficient markets otherwise, we don't achieve in even 6 months. And so they really had a large opening inventory. Obviously, so the issue is how far till it'll turn to repeat orders and go forward. So the market here is a -- not a large market, but it is a nice market and we believe that it's capable of growing into a large market. And obviously we are excited about the Japanese market and the launch. But that is especially why we refer to these figures because it's an unusual position for us to have this level of opening orders, even in a market that size. The opening was very much larger that we would've ordinarily put into a similar-sized market.

And lastly, I missed your answer to Tom's question about the buyback, so did you say that you didn't buy back in the quarter, was there any legal constraints in terms of your -- the ability to buy back...

No. we don't have any legal or other constraints. It was simply a question of us evaluating, looking at a number of other alternatives, evaluating -- we really just end up -- make the decision to actually go ahead with the buyback.

And we'll go with our next question from Kaumil Gajrawala from UBS.

If I can also ask about the cash balance for a minute, you got about over $800 million on your balance sheet, you are generating about $350 million a year. I know you're not ready to make an announcement but in the past you said that the dividends were -- in the past being about 3 years ago, dividends were out of the question. Given where you are now and how you see the next couple of years putting themselves out, and also a reluctance maybe to do a buyback, can you talk about how you're thinking about dividends?

I mentioned earlier, Kaumil, that the board is considering a number of alternatives and those discussions are progressing.

I think that there have been no change in our basic philosophy. It doesn't mean we would rule out a dividend forever but certainly it's not on our radar at the moment. I think what's more likely is, ultimately, is to use that cash to buy back shares or for other purposes which we are. We're just looking at other options before we commit to a buyback -- a new buyback program.

Okay, got it. And then you talked a bit about some new efficiencies, some streamlining. Can you talk maybe specifically about the U.S. and where profitability has been trending in the U.S. because with the big rollout is international, it's been a little harder to see how things have been progressing in the United States so could you maybe give some context on that?

The U.S. has been pretty constant. Our margins have been reasonably stable and we've been able to generally keep ourselves within a pretty close range. We've continued to obviously invest in the brand as we continue to increase and roll out new products so some of the new product investments may have possibly gone to offset some of the savings and efficiencies we would have on some of the older brands. I'm not sure how else to answer your question other than to really say it's been consistent, it's remained profitable and I don't see much of a change in either the gross margins or operating margins. There are differences in quarters because of timing and because of particular programs when we sometimes front load a promotion or higher as a percentage in a first quarter where your sales are lower and lower in the summer. But other than those there are no major swings that have really been -- have had any real significance -- the swings have really come from, obviously, the investments and the launches, from time to time overseas, and issues we've had with that and so we've been -- and those are continuing, starting to settle down and starting to get in more into a growth mode and a profitable mode, as I indicated for -- with regard for the Western Europe, which is our main area outside of the U.S. arm, excluding Canada and Mexico, they have been -- we've had business there for some time and they're both been profitable for a number of years.

And we'll take our next question from Bill Chappell from SunTrust.

Just a little color on a couple of things, one, and maybe I missed it, you talked about the Mexican market being down year-over-year, can you maybe give us a full color on that?

The actual energy drink market in Mexico, again, on the Mexican numbers, we get our Nielsen and compare it, really it's one month, month-to-month. So this month, it was March this year versus March last year. And again, those numbers tend to jump around a little bit depending on whether there are promotions by either the largest player and competitor to us, which is either Red Bull or ourselves. The market is very largely influenced by the OXXO chain. They have a very significant percentage share of the market and, again, by just doing a promotion whether it's Red Bull or us, in OXXO really skews that market, literally can push it up or down. And they did have some tax issues. They introduce a tax on energy drinks that have a little bit of a dampening effect as to how you deal with it, we sort of reformulated our product and that was last year and we sort of did see sort of a reasonably good increase in our sales. So this was just -- the category is just sort of it's been up and down like this in the last few months. So it's down 5%, roughly, and we have actually increased share although our actual sales levels are marginally down. But again I think it can change from month-to-month quite dramatically depending on whether we implement a promotional program with OXXO. It has a very big influence on those numbers. So the key for us is really more of the market share-ish information and we think that the category will ultimately start to grow or show growth again later in the year.

And since we're talking about other countries such as Japan, is there a way now as you're getting into the quantified -- what the potential is, I mean, is it bigger than Mexico, is it more like a Canada, I mean, how should we look at that in terms of the opportunities?

You really can't compare it. Apples and pears, in other parts of the world, with a whole different buying philosophy, and a different sortie [ph]. The category at the moment is thought to be about 2.5 million cases, maybe a little bigger, maybe 3 million cases, and it has been growing. But that's what I would define as the Western or modern energy category. There has always been an energy type category in Japan, a traditional energy, for many, many decades. They're usually little vials, 2.5 ounces, small glass bottles or other containers, flat containers and that's been around for a long time. That category is probably as big as a 50 million case category. The question is how long will it take for the Japanese consumer to be partially converted from traditional energy to modern energy, and then how many new consumers, who are not in the traditional energy category. Now can you actually -- by having different products, different flavors, we believe that will help stimulate attention to the category and bring in new consumers in Japan. And then there is a big market and we believe that can grow but we're in the area of guessing at the moment because we -- we only have those facts, roughly but we think that there is a lot of potential but it's going to take time to grow into that potential and then see what we can do. But those are the 2 sources we would hope to draw from in order to increase the base energy category and we hope to obviously then participate in that quite -- at a high sort of share. So we're hopeful for it, but if we really don't have statistics that I can give you that are reliable. It's absolutely different to Canada and Mexico. Just the -- those markets are very much closer to the U.S. there. The beverage consumption patterns are closer to the U.S. whereas in Japan, I think is a much more traditional and a very different market.

And Hilton, did you give a tax rate for the full year?

We gave the tax rate for the quarter.

Can you give us an idea for the full year?

We're going to take that question under advisement. We -- this quarter was affected by the establishment of the full federation allowance against the fair taxation of foreign subsidiary. At this time, we expect that the tax rate probably will be comparable to the previous year but I'll have to take that under advisement.

And that does allow all the time we have for questions today. I would now like to turn the conference back to Rodney for any concluding remarks. Please go ahead.

Thanks, once again. We all are pretty gratified by the performance of the category and our company, particularly, the Monster brand in this first quarter. We've given you the indication of our sales in April, so we're positive going forward. And we're also very excited about the Rehab line. Again just to repeat, even the Peace Tea line has really started to come into its own and we think that also can develop into a very nice brand for the company going forward. So just keep our heads down, we carry on trading, we're also hopeful for Europe, also starting to perform very nicely and, hopefully, we'll be in a position to report continuing good results when we report on the next quarter. Thank you very much for your attendance and speak to you soon.

Okay, ladies and gentlemen, this does conclude your conference. You may now disconnect and have a great day.