Good day, ladies and gentlemen, and welcome to Monster Beverage Corporation Third Quarter 2017 Financial Results Conference call. Currently at this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Also as a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Rodney Sacks, Chairman and Chief Executive Officer. Please go ahead.

Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President is with me today; as is Tom Kelly, our Senior Vice President of Finance. Before we begin, I'd like to remind listeners that certain statements made during this call may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended, and which are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance and trends. Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside the control of the company that may cause actual results to differ materially from forward-looking statements made during this call. Please refer to our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed on March 1, 2017, and our Form 10-Q filed on August 9, 2017, including the sections contained therein entitled risk factors and forward-looking statements for discussion on specific risks and uncertainties that may affect our performance. The company assumes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. An explanation of the non-GAAP measure of gross sales and certain expenditures which may be mentioned during the course of this call is provided in the notes and designated with asterisks in the consolidated statements of income and other information attached to the earnings release dated November 8, 2017. A copy of this information is also available on our website at monsterbevcorp.com in the Financial Information section. The global beverage…

Thank you, sir. Our first question comes from Judy Hong of Goldman Sachs. Question please? Judy Hong - Goldman Sachs & Co. LLC: Thank you. Hi, everyone.

Hi, Judy.

Hi, Judy. Judy Hong - Goldman Sachs & Co. LLC: So, I guess, I wanted to just start off with the gross margin question. Rodney, you called out a few factors that negatively impacted the quarter. I just wanted to get a little bit better sense of some of the callouts, specifically product mix, and then I think you said other costs. So hoping you can elaborate a little bit more? And then how much of those are really more transitory and one-time if it's something about getting the Java back online.

Well, Judy, we've always said that the international margins are lower than domestic margins. So the quarter was more pronounced because there was a larger growth in sales internationally. So that accounted for a significant portion of the reduction in overall gross margin. We had some other issues relating to input costs, some cost increases – I shouldn't say issues – cost increases in relation to input costs. And there was some impact as well of product mix where we have different products that we sell that have different – every SKU has a different margin. So on balance, this quarter there was – and with the Java coming back on stream, there was a reduction in the overall margin because of those items. So those are the three major factors that contributed to the reduction in gross margin.

Thank you. Our next question comes from Bill Chappell of SunTrust. Question please?

Thanks. Just to follow up on the U.S. markets. I understand the issues with Java Monster and what have you, but the overall energy drink category has kind of had the whole year low at low-single digits. Are you seeing from the competition, Red Bull in particular, just lack of innovation? Are you seeing an overall slowdown? And are you just gaining share? Or – and maybe with that, what are you seeing out of the c-store channel? We had heard earlier in the year that that had slowed down, but it seems to maybe be picking back up. So kind of any comments on kind of the state of the U.S. energy market overall, not just you gaining share and getting products back?

I think that as we have said on previously calls, there had been a slowing of the convenience category, which traditionally had grown at a higher rate than the other categories, and we were sort of – everybody was sort of scratching their heads a little to try and find out why. And we didn't really – weren't able to really put our finger on it. We are seeing a pickup back in the convenience category sales, and they do seem to be starting to turn around and come back, as I indicated earlier on, on the numbers. So we are positive about the category and about the convenience traffic as well. That does seem to be doing better.

Thank you. Our next question comes from Vivien Azer of Cowen. Question please? Vivien Azer - Cowen & Co. LLC: Hi. Good afternoon.

Hi. Vivien Azer - Cowen & Co. LLC: So I know you guys aren't in the habit of offering guidance, but given the volatility that we've seen around Java Monster, which has historically been such a good growth driver, can you give us a sense of how we should think about distribution coming back online? Thanks.

Yes. I'm not sure we can give you very much a guidance. Obviously the energy and coffee category has continued to grow through our difficulties. We, obviously, lost sales and we lost some market share. And as we indicated at the end of the quarter, everybody is – we are back with products in inventory, we're shipping orders in full to our bottlers, and they are now – and we are together now getting product back on the shelf. So we've got to, obviously, fight back and get back the shelf space that contracted during that period, but we are – we're quite encouraged that we'll get back shelf space quite quickly. We are positive for the coffee category, and that is why we're right in the throes literally this week of starting to sell and launch Espresso Monster, and we will be coming – launching, early in the new year, we'll be launching Café Monster in glass bottles. So we think there is good growth potential for the coffee category and the coffee plus energy category. We still think those are good – it's a good growth category beverages, generally and for us. And with getting back into our inventory position and eliminating our shortages, we think that from the fourth quarter we will start to see the benefits come through. So we are positive about it. But to what extent and how quickly, obviously, we're not going to give guidance on that because it is uncertain anyway to us even at this time.

Yeah. All we can say is that our bottler partners are committed to getting the shelf space back and committed to the product.

Thank you. Our next question comes from Robert Ottenstein of Evercore ISI. Question please.

Great. Thank you very much. I'm wondering if you can give us an update on Hydro, how it's doing in the marketplace, and whether you've gotten by the supply issues at this point, and maybe perhaps compare Hydro's reception in the market with Mutant. Thank you.

I think they're two very different products. Let's just focus on Hydro for the moment. Hydro we've had a really good response, both to the package and to the ingredients and taste. So both of them have risen rather (31:08) well, which makes us very positive for this sort of sub-brand or subcategory. We have continued to experience production challenges and being able to get enough cans and that's been a challenge. So while we look at distribution and sales numbers, we think those numbers have been negatively affected by the fact that they don't actually relate or give the full story because we're out of stock a lot of the time. If you're out of stock, it doesn't show in the Nielsen numbers. So we believe the results have actually been more positive than are reflected in the actual sales purported to (31: 35) in the Nielsen, and that is consistent with our feedback from the market and the field and from retailers. So we are very positive about that. The way we've – addressing that is we will be launching a line of four SKUs; one – we're probably going to take one of the existing three SKUs and convert that into a 750-ml bottle, and we're going to have three other 750-ml PET bottles, one of which will be a zero calorie, zero-sugar product. So with those four products being launched early in 2018, then we will continue to maintain our sales of the cans. We are looking and are engaged in negotiations to secure additional capacity and additional production facilities to make the plastic can, the PET can, because we do believe that is a very attractive package and it is, I think important for the brand. So, ultimately, once we get that rectified, we'll obviously expand the offerings in the PET can. So going out probably early point next year, we will have PET cans and a 750-ml, a 25-ounce plastic bottle. So we believe that that will cater for the out of stocks and the erratic supply, because you'll have one or the other products in stock pretty much at all times in stores, and we are positive about Hydro as being a new category for us and a new growth area for us in 2018.

Thank you. Our next question comes from Andrea Teixeira from JPMorgan. Question please.

Thank you, gentlemen – and ladies and gentlemen there. Just on the – if you can comment a little bit on China and what are the impressions now that you've probably reached where you wanted to be. And I know you can't compare with last year, but if you can tell us how it's tracking against plan. And if you – I think building with the last question, if you can talk a little bit about Mutant. Thank you.

China is a great opportunity for us. It's a logistically very, very big and complex country, and we are continuing to make progress. We are learning how to market and promote our products, distribute our products in China. We had some challenges in basically securing space for us. Basically there's no real energy category. So it's not as though you can focus on the energy category and say you've got an energy product. They just put your new product in the energy category. And so there has been some struggle with the Coke bottlers where their focus and perhaps the easier way where they believe they were doing an adequate job is to – if they're struggling to find a position for the product, they find a position in the Coke cooler and your product goes into the Coke cooler. Now that seems to sound fine, but ultimately, if the other products like the Red Bull Gold, which is the leader in the category and are being sold in an independent cold door, even on the warm shelf, the consumer is not expecting to go into the Coke cooler and find an energy drink. And we're really going through a learning curve with our bottlers to try and explain to them that the first prize is not actually being in the Coke cooler. The first prize is actually being – and the essential distribution point is to be right next to Red Bull. And if you get a secondary point of distribution which is obviously always positive, then you're going to the Coke cooler with that secondary distribution point. So that is just an educational challenge to really get and communicate that to the very, very big sales force. So on the one hand, you've got this really big sales force available to us, which is a very big positive. On the other hand, they're used to selling and putting their product into the Coke door and into the Coke cooler where they have many of them. We're really having to refine that and tweak that slightly, and that's part of the challenge we have. So we remain very positive, and we believe that it's going to continue to grow. Our sales are going to continue to grow, and it is a very, very important market for us. It's just going through a learning curve and getting everything down as we continue to progress. So that is really all we can say on China is the sales are good. They're substantial. If you look at our other markets and comparable other markets that we've launched at, the sales are higher, but we are working through these operational challenges and we'll get through them. There's no doubt. It's just a question of getting them and having the time to train everybody and understand what the priorities are. So that's really an update on China.

And I always – when I look at China, I always look at what happened in other countries where we launched, and generally we sustained losses in those countries in the earlier years. You can look at Europe and track through the various Qs and Ks, and China I don't believe will be any different. So we will sustain a loss in China this year and it's something we were prepared for and is not a shock to us.

So we still remain ultimately at the end of the day positive that that's going to be a large contributor to the company and to the brand going forward in future years. With regard to Mutant, we're still putting our heads down. We are sort of looking at expanding our distribution and our channels. We believe that the brand has got a good potential. We are continuing to put promotional efforts behind the brand this year, and we have the bottlers' support, and we will continue to put focus on Mutant. And we see that as a long-term potential benefit and good opportunity for the company. But it is, again, if we're looking at an analysis, you look at the brands in the soft drink industry and the average age of the brands of old – decades old that we're going up against. We're doing quite well if you look at where we are in relation to the other brands, and we are going to continue to – we will continue to make progress against them as we continue to develop the brand. We're doing some testing at the moment. We're going out to test a 38 ml cap as opposed to the 26 ml, which is really – really looks good on the product. It does transform the visual image of the product and its position. And as soon as we get some input back from some key channels and key accounts we're testing this larger cap formatting, we will determine whether we actually transition all the production into the larger cap or stay with the traditional 28 ml or 26 ml cap that you normally use for soda products. So that's the one thing we are looking at in the Mutant line, and we think this is so far out from our own feeling internally is that we think that this cap will be quite a positive addition to the line going forward.

Thank you. This concludes our Q&A portion. At this time, I'd like to turn the call back over to Rodney Sacks, Chairman and CEO. Please go ahead.

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

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect. Good day.