Good day, ladies and gentlemen and welcome to the Monster Beverage Corporation's Fourth Quarter and Year End 2016 Financial Results Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. Rodney Sacks, Chairman and CEO. Sir, you may begin.

Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President, is with me; as is Tom Kelly, our Senior Vice President of Finance. Before we begin, I'd like to remind listeners that certain statements made during this call may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended, and which are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance, and trends. Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside the control of the Company that may cause actual results to differ materially from the forward-looking statements made during this call. Please refer to our filings with the Securities and Exchange Commission; including our most recent Annual Report on Form 10-K filed today including the sections contained therein entitled Risk Factors and forward-looking statements, for a discussion on specific risks and uncertainties that may affect our performance. The Company assumes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. An explanation of the non-GAAP measure of gross sales and certain expenditures, which may be mentioned during the course of this call, is provided in the notes and designated with asterisks in the consolidated statements of income and other information attached to the earnings release dated March 1, 2017. A copy of this information is also available on our website at monsterbevcorp.com in the Financial Information section. On October 14, 2016, we announced a three-for-one stock split of the company's common…

[Operator Instructions]. Thank you. And our first question comes from Bill Chappell with SunTrust. Your line is now open.

Just a little more color around the fourth quarter on both tenants. You said, lower promotional allowances and then also on the top-line. On the promotional allowances, is that something that that was more year-over-year comparison or is that something that we should expect in general going forward in 2017? And then on the top-line was there, you may be could you break out was there much benefit from kind of the Mutant sell-in, from the China sell-in or was that negligible to kind of the top-line growth?

I think most of the answers comparatively based on a quarter by -- comparable quarter for last year.

Okay. You said it was a benefit to gross profit that's why I was wondering.

I think we made the point, Bill, when we spoke about gross profit that the additional promotional allowances in the quarter and other items had the impact of increasing gross profit margin by approximately 2%. So in that I think what we try to suggest that these promotional allowances, the reduction in promotional allowances may not necessarily endure over the quarters in 2017.

Thank you. And our next question comes from the line of Mark Astrachan with Stifel. Your line is now open.

Hey guys, just one housekeeping. I think you still need to answer Bill's other question on I think Mutant sell-in. Also my question is just on general sell-in and sell through trends, so you touched on this at the Investor Meeting in January about untracked channels contributing more than you'd seen historically, obviously that disconnect had widened pretty substantially here. So may be if you could sort of touch on what you think is contributing to that and I'm talking specifically about the U.S. may be sort of methodology gathering what you're doing in universities, foodservice, vending et cetera, just sort of much specificity there if you could give would be helpful? Please.

We're just dealing with Mutant. Mutant we went through this a few times. We repositioned Mutant in selected channels at full pricing. We've not been aggressive in our promotion. If you look at the average pricing in Nielsen, Mutant is at average pricing in all the different periods depending which period you look at it's still above 196. If you compare that, that's quite a substantial premium to the other soft drinks and its main competitive soft drink that we're looking at competing, with which is Mountain Dew. And so we have strategically not promoted Mutant during the winter period. We are taking steps to deal with expanded distribution. We will obviously increase our promotional and other activities around the brand as we continue to go into spring and summer. So when we look at the numbers and we look at the sales per point, we think the sales per point are pretty good in relation to a lot of the other well established brands in the area. If you look at the last four weeks that has dropped off a little bit again because of the -- we believe the lack of promotional spend and behind the brand that that was intentional in this period of time. It is a soda and we are looking to as I expand distribution, expand the channels and also become substantially more active in the promotion that's driving us starts going into spring now. So we are still positive about the brand and its prospects and sell to particularly where we have seen at the substantial price premium, we've seen substantial sales per point that are higher than a lot of very well established brands that are being around for a long time.

I think there is one other point that we need to focus on and that is that the permanent shift will be done and the placements will be done in March. So we launched Mutant off-cycle, which means that in many cases the product is on space where the bottlers could find space for the product. And in March, the sets, the new sets will become available in the convenience and gas channel where the product is sold.

There are another, couple of other key channels where we have secured listings and we will be. Those are things will start coming through in April and May. So we do have ongoing plans to basically ramp up for put effort and focus behind the brand.

I think it's also anticipated that the -- this is not a full blowing launch; it is also called a bubble up launch. There is only launch in convenience retail in chains in convenience retail that was rolled out to Mom and Pop to a limited degree and that's where we're at this time. As Rodney said, there will be further listing that have been secured that will take place starting in April.

Then just talking about the Mark's question, there is a bigger divergence but that is the fact of matter is that the non-major channel are continuing to expand for us. We are dealing in the non-major area. We also have some concerns about the accuracy and the represented nature of the convenience data which does seem to us to be a little more inaccurate in relation to as compared for example to grocery where we think there is a closer correlation and a better read. And that's just a fact of life. But we are where we are on our sales and we continue to see increases, although clearly there is some softening in the convenience channel.

And also don't forget that the Java's shortages that we experienced, they also affect.

Yes, affect the whole channel and whole category.

Thank you. And our next question comes from the line of Amit Sharma with BMO Capital Markets. Your line is now open.

Hi, just a quick navigation going back to the question there is no case to sort of like the inventory build-up in the channels because of divergent Euro [ph] sales?

Sorry. Just say that again?

So we shouldn't view there is inventory build-up in the channel as suggested by the divergent Euro sales and slowdown in channel, you're not seeing inventory build-up there?

No, not that we've seen. And I think that the bottlers would be -- will be building up inventory of Monster in their system either.

Got it. And then as we think about Hydro launching later this year, would you expect Hydro also to be a bubble up launch or would you expect that to be a little bigger launch more in line with your traditional products?

I think it would be -- it will be more in line with our traditional launches. But again we generally do launch through a bubble up process, somewhat more or less extensive but that's generally how we've always launched our products, it's regarding to selective chains and into launch but it will be a more extensive launch than we had for Mutant. Mutant was very exceptional launch and it was very limited by design and by strategy and being off cycle Hydro will be a more broader based launch going out. But clearly initial focus will be on the convenience and gas and independent channels, et cetera.

Thank you. And our next question comes from the line of Kevin Grundy with Jefferies. Your line is now open.

Thanks. Good evening guys. First one, housekeeping question just point of clarification on the January gross sales update, if I'm not mistaken, there is an extra selling day in the month of January and then I think that there is one less in the first quarter. So Hilton perhaps if you could just clarify that that would be helpful. And then the broader question on Brazil, which looks like it's starting to bounce back now with the distributor change behind you. How high can that share go, how quickly can you guys ramp in that market. Can you give us any sort of parameters for which you think you can grow market share it's like the 27% that you have in Chile is that, is that reasonable and over what period of time. Thanks.

I think there is an extra selling day in January.

Extra selling day in January, that is correct.

Yes. And I'm not sure about the quarter but in my review one less in the quarter. We know there is one less in February but we haven't done the exercise. So I think just mathematically that is right.

Yes, exactly. We're -- just to be clear, I mean, we run our business quarter-by-quarter and while selling days obviously are important because sales have generated on each day. We've never looked at our business and never tried to explain our business based on one or less selling day and I just want to be clear on that.

On Brazil, Brazil a very unique market. The country at the moment is struggling obviously talk of it being almost in the depression and so there are challenges. We also have a group of 10 bottlers; it's a little bit different to Chile. Chile there were two main bottlers they really, we started to have some pretty -- we really had some pretty good momentum for the brand. It was well established, it doesn't have a deep distribution but where it was, it was already selling into the high-teens and doing pretty nicely. So when the two Coke bottlers in Chile took it over, they really didn't price the brand and obviously we're able to sort of more structured market, we're able to expand the market, rather up probably more quickly and more I think efficiently than is the case in Brazil. And so the results have been very good. And we've been very encouraged by the results. In the case of the Brazilian market, it is a much more non-traditional market you have literally well over a million of these little traditional stores all over the place and they are audit get you, audit of service and grow invariably, there is a very, very large and interpret wholesale system that helps get to these stores and it's just you're just not comparing apples-and-apples. So we've got to manage a group of 10 odd bottlers in a very different environment, countries and also that is going through tough financial conditions at the moment. But that being said, we think that will take some time, but as it has in many of the current markets where you do deal with these very big bottlers or basically groups of bottlers it takes time for them to get coordinated and get their system…

Thank you. And our next question comes from the line of Laurent Grandet with Credit Suisse. Your line is now open.

Hi Rod, hi Hilton. A quick follow-up on Mutant and you mentioned earlier this year the share that you would be launching in Mutant in Wal-Mart in Q2 this year. Could you please give us a bit more color my understanding was it, it would be about 1,000 stores from April, with its first shipment in March. Should we think now differently or --?

I'm not sure, not sure where you got that from.

Okay. Well that's I mean a question I ask at some point and to some retailers and so are you; are you confirming or not confirming?

Not confirming anything.

Okay. So I've got a chance then for a second question. Regarding the on-premise, I mean you mentioned, I mean you're making lots of progress there. Two quarters ago, you mentioned, I mean you are testing in McDonalds and Dunkin Donuts my understanding here is that you would be launching in Dunkin Donuts. So could you abate us on those two tests and either any other big customers we should think off from that you are making progress?

Well McDonalds the test is continuing, they don't make mutinous decision, so that test is continuing. And with Dunkin Donuts, we are distributed in a number of their outlets, so that's not. I mean we alluded earlier to the fact that we were launching Mutant in a number of -- number of chains later this year and you can read into that, but certainly one of them is a major retailer.

I think it's premature at this time to give more detail on that launch. We'll start going through, as we said in spring and then I think that would be in a much better position to give you much more color on Mutant's and the activities that we have then behind it when we report our first quarter results in the first week of May.

Thank you. And this concludes today's question-and-answer session. I would now like to turn the call back to Mr. Rodney Sacks for any closing remarks.

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

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