Good afternoon, ladies and gentlemen. Thank you for attending this call. I am Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President is with me; as is Tom Kelly, our Executive Vice President of Finance.As you may have already noticed, my voice is soft today. That’s because I recently had a benign polyp removed from my larynx. The good news is that I am fine. But I have been advised to use my voice sparingly. So I will save my voice for the Q&A and hand the call over to Hilton.

Thank you. Tom Kelly is going to ready the Safe Harbor statement before we start the call.

Before we begin, we 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 callPlease refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed on February 28, 2019, and our most recent quarterly report on Form 10-Q filed on August 8, 2019, 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 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 condensed consolidated statements of income and other information attached to the earnings release dated November 7, 2019. A copy of this information is also available on our website at monsterbevcorp.com in the Financial Information section.

Thank you, Tom. We again to turn out to the quarter and we will move on from there. Consumer beverage preferences and tastes continue to evolve at an increasing pace. And we are endeavoring to address them through our ongoing innovation of new products.In the third quarter of 2019 net sales were $1.13 billion up 11.6% from $1.02 billion in the third quarter of 2018. Net sales for the third quarter were negatively impacted by approximately $12.2 million of foreign currency movements. Without these foreign currency movements, net sales for the quarter would have been up 12.8%.The comparative net sales in the 2018 third quarter included approximately $16 million in net sales of advanced purchases as a result of the price increase in the United States in of our products effective November 1, 2018. Adjusting for these advanced purchases and foreign currency movements, net sales for the 2019 third quarter would have been up 14.6%.Turning now to gross profit, gross profit as a percentage of sales for the 2019 third quarter was 59.4%, compared with 59.8% in the 2018 third quarter. The decrease in gross profit as a percentage of net sales for the 2019 third quarter was primarily the result of geographical and product sales mix. Such decrease was partially offset by price increases, as well as reduced input costs.Distribution costs as a percentage of net sales were 3.3% for the 2019 third quarter, as compared to 4.1% in the 2018 third quarter.Selling and marketing expenses as a percentage of net sales were 11.1% for the 2019 third quarter, as compared to 11.2% in the same quarter in 2018.General and administrative costs as a percentage of net sales were 10.1% for the 2019 third quarter, as compared to 11.1% in the same quarter in 2018.In the quarter, payroll expenses…

Thank you. [Operator Instructions] And our first question is going to come from Andrea Teixeira from JPMorgan. Your line is now open.

Thank you all, and Rodney, I wish you a fast recovery. And so you can help us with the positioning of the core Monster, which I understand correct, if I understand correctly was down 2.4% in all outlets and declined 5% in convenience. Do you believe that is related to the promotional environment of your main competitor or just a function of Reign gaining more shelf space? And how are you planning to react to that? Will you feel the need for more promotion for to become more promotion as well or you are just happy with the total performance? Thank you.

Well, I will take that. Forgive of my vocal. Just I think that if you look at the category, what we have noticed is you have had an impact on all of the -- pretty much on all of the SKUs that are had been existing in the market over the past couple of months. You are seeing the increases coming from us and our main competitor coming from new products.So -- but -- if you look at the total category, the total category remains healthy. It’s up 9%, which is really good growth. So the category is growing. It’s been a shift within the category. We -- you have got to look at brands and whatever we have in the category. So you look at the fact that we are down or some of the individually SKUs are down. But overall, the category is growing, our overall corporate sales are growing, we would address obviously individual SKUs.And I think this is an experience that’s being experienced by general consumer products for established brands. There is a movement generally on consumers to want to try new products, new flavors, new innovation. And we do have a new innovation, which we -- some of that we have announced we recently launched. We have plans to launch quite a lot of new innovation. I think that in some cases, some of our new innovation that we launched earlier this year, perhaps, didn’t get enough shelf space or there have been some shelf space taken from our existing product, which I think has affected sales.So looking at one of the sort of main things I think we will look at going forward is improving the quality of our distribution, getting out innovation more efficiently and more effectively on the shelves And as we go forward, we believe there will be additional space allocated to the performance energy category, which will relieve pressure on the space we are looking for our existing energy brands and the innovation under the Monster line.

So just to add to what Rodney is saying, if you asked, if we are happy with the way things are, and obviously, we are not. We want to see the Monster brand growing. What we have evidence of is that the price increase has stuck. And when you will get our Q tomorrow and you can even see it, I think, in the release, that the promotional allowances are very much in line with where they should be and we are not over promoting.Having said that, I just want to reiterate that the category if you look back 52 weeks, the energy category has shown incremental growth per Nielsen of $1.3 billion. So this is a growing category and it’s a category that now has a new segment, which is performance energy and performance energy is growing within that category.And, as I look at some of our other competitors, and this is no defense, but as we look for example, even at Red Bull, which is growing and we mentioned on the call that it’s growing. The Red Bull core brands also not showing growth. The diet SKUs are and their additions are, but in general the Red Bull core brands are also not showing growth and are in decline. Having said that, we have got plans with our distribution, which has been a challenge to dramatically improve distribution and distribution on shelf and in the coolers.

Perhaps there’s just one other aspect I’d like to add to that, this is sort of broad view. These comments we have made really focus on the U.S. and the US has been our major market. But as we develop as a company, the opportunity for us for our energy brands Monster in particular plus our other brands is international.And if you look at the information we just gave on this call about how we have accelerated international growth in existing international markets and new markets, that’s where we look to in the future for the company.Our sales as we -- U.S. was about 72% of our sales last year this quarter and it’s now down to 67. So if you take that with as a growth position, it’s going to continue to grow. So we see a lot of run way to grow internationally, to grow the brand and these markets are continuing to grow and are very healthy.So, we need to address challenges we have in the U.S. at the moment. But, overall, we still believe in the health and we still believe in the growth of the brand both internationally and even in -- within the U.S. as well in our other energy brands.

And then one thing we really should -- turning back a few years for a moment, sorry. The one thing we really should not forget about is the unmeasured channels, which we have been absolutely emphatic about, our Food Service is unmeasured, Amazon is unmeasured, Costco is unmeasured, and a slew of other Home Depot and Lowes all of those channels are unmeasured. And the amount of sales that are going through those channels is really -- is a significant number.

Thanks.

Thank you both.

Thank you. And our next question comes from Steve Powers from Deutsche Bank. Your line is now open.

Yes. Thank you. Maybe a little bit more on the U.S. Can you talk about growth in the quarter coming in a touch below 3% versus the Nielsen data over the course of the quarter pointing closer to 6%? I think we all know you had tough comparisons in the year ago quarter, but at the same time, there was an extra selling day this quarter. And so just how do you think about that 3% number in light of those factors, building on Andrea’s question? And then if I could related question, building on what you just said, but in the context of Coke Energy, and I think, that we all appreciate what you and Coke have each said about the intended interplay between Monster and really Monster and Reign and Coke energy and that they are targeted different consumers and designed to minimize cannibalization risk, but given that they will be going through common distributors, just how confident are you that those new Coke SKUs won’t take away from some of your smaller SKU use whether Monster Reign, NOS, Full Throttle or otherwise, rather than having them successfully fine incremental space in the cooler or take away from competition distributed by others? Thanks.

So let me start with your first question. When you look at Nielsen and you look at our own financial numbers, you cannot draw an exact interpolation from one to the other. Nielsen sales out, our sales are sells to the distributors, the bottlers. We have a SKU of unmeasured channels that I mentioned. And while it’s a good indication of what’s of the movement of sales, it’s not an absolute science and one has to be very wary, but we have said this on many calls in the past, I am going to be very careful trying to balance our sales to our bottlers and our distributors with sales out to the consumer.Nielsen read a sample. They don’t read all the channels. They don’t read, as I said, the Food Service, they don’t read Amazon, they don’t read Costco. They don’t read the Home Depot’s and the Lowe’s and all the other channels where our products are distributed. So it’s difficult to draw a comparison from one to the other. All we can do is give you the facts and you guys make your own assessments from there.

Now as regards to Coke Energy. I think that most of the analysts are very up-to-date and astute on analyzing Nielsen well. They should be looking and analyzing Nielsen around the world and that would give everybody their own view on what’s been happening with the rollout of Coke Energy around the world.We have seen the brand rollout and we have also seen the rate of sale, not keeping pace with initial sales, the percentage market share has been small and hasn’t really had an impact on us. The main impact that I think we will repeatedly said is that we did have concerns or is the sort of noise and in the market and focus from divergence of focus. But ultimately, in Europe, things are settling down, our growth rates of our brands are on track and have continued.And I think that by and large, the Coke system has pretty much focused on not trying to cannibalize our existing products and take pricing from us and it has worked reasonably well. There have been a few countries where there have been some challenges and we have addressed them.So, again, we don’t know, we can’t tell what Coke Energy will be in the United States. It’s formulated little differently. It’s a little different in sizes. There are two variants. But, ultimately, we think that, we just need to manage the lack of focus or conflict of focusing from to bottlers. Ultimately, we don’t think it will have a major impact on our brand and we will manage it and going forward how you feel.

Yeah. I mean, what I would do if I were an analyst, I would get the information from the markets in which they have launched and there are a number of them. And frankly, they have not -- the numbers that I have seen and I can’t talk for numbers that other people may have seen. The numbers that I have seen are showing that they have not performed particularly well and that our brands have continued to grow and our brands have continued to develop in those markets. But get the homework.

We don’t know what the U.S. will be, it’s own market. And so we will see how things go and we will manage it.

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

Thanks. Good afternoon, everyone. And Tom, good to hear from you on the call today.

Thank you, Mark.

There it is again. So, I guess, I wanted to ask about gross margin. International continues to be a bit of a sore spot there. U.S. again continued to be pretty good. So you touched on some of the supply chain issues and EMEA having been resolved and kind of talking directionally to stabilization or at least that’s maybe my interpretation of it. LatAm was obviously flat in gross margin. So is the worst behind you at this point. You have anymore visibility on that, I am not asking for guidance. I love a personal point of view, kind of how we should all think about that since I think it’s one of those areas that is a bit more of a black box than others. So any help there would be a appreciate it?

It’s not really a black box. I mean, we sell concentrates at high margins and through the strategic brands. And we sell finished products at different margins that really are a base for a number of factors on the relationships we have developed with the bottlers and distributors in various countries and the cost of production.So it’s always every quarter the issue is how much do we sell internationally, which has low margins and I will get on to that, and I think, I have discussed it on a previous call. And how much strategic brands did we sell as a cooperation versus finished goods at Monster Energy.So when we established a model in the United States, the distributors were allocated on margin, which was satisfactory to them and we had the lion’s share of the margin. As we have grown internationally in more virgin territories, the bottles in the Coke system where we have transitioned or launched with, they have demanded a highest share of the value chain.And this is something that we have had to deal with, understanding that if we want to launch in various countries internationally, that’s going to cost us more in margin than in the U.S., where we had a very established business and the Coca-Cola bottlers segued into this establish business with the same margins. We also have different costs impacts around the world, which we try to manage as best as we can.And then one of the other issues that we are facing is that our juice products are doing very well. Our coffee products are doing very well and they themselves have lower margins than the traditional Monster beverages, which have, and of course, the diet has the best margin of all.So, you have this issue of competing margins. However, there are things we can do with the juice products, we can establish greater efficiencies. We had a big improvement this year in this quarter in the U.S. In fact in freight getting product and raw materials to our co-packers, that was big benefit -- the other benefit that we had in the U.S. was in aluminum.So there is a difficult range of factors that go into what the overall consolidated margin is. It is not just a simple one calculation. But we are working on it. And, as we have done in the U.S. and as we have done with freight in, we continue to look at our model internationally, and see where we can improve on our gross margin percentages. And as I have always said, Mark, we sell products and we make gross profit dollars. We don’t make gross profit percentages.

I think that the only thing I would like to add to that is -- very briefly is that, in the international market, there are a lot of markets that we have had to traditionally shipped into many markets, so many countries from other countries.We have -- and as we continue to expand and have sufficient volumes in countries, we are all switching to local production in those countries. We have opened up quite a number of additional production facilities in Europe this year and have got a number -- a large number going forward, and as we go forward, we think that will certainly help our margins internationally as well. But, at this point we just don’t think there is any numbers we can point you to.

And also the community knows that we purchased REFILE, the concentrate facility from the Coca-Cola Company with the intention of producing ingredients in EMEA, which will reduce our improving efficiencies, improve costs and reduce the huge distances that we shipping these ingredients right now.

Yeah. We will also address some of the challenges we had last year and a little bit this year even in out of stocks and where we have increased demand for particular products, we had very long lead times in order to ship ingredients to pack us to try increased volumes this will obviously improve those efficiencies and will help us going forward. So that’s been a -- we think we are very excited about the fact that that will help us in the whole of the EMEA and Middle East and Africa.

Thank you. This concludes today’s Q&A session. I would now like to turn the call back to Mr. Rodney Sacks and Mr. Hilton Schlosberg for further remarks.

So thank you. You got my name right. We tested them before that, so well done on that. Thank you. On behalf of Monster, I’d like to thank everyone for their continued interest in the company. We continue to believe in what we are doing in the company and our growth strategy and remain committed to continue to innovate, develop and differentiate our brands and expand the company both at home and abroad, and in particularly expand distribution of our products to the Coca-Cola bottler system internationally. We always 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 our strategic brands as well as Hydro, Predator and Reign and the new innovation plan for 2020. Thank you very much for your attendance.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone have a great day.