Q4 2019 Earnings Call

Hi, thank you. Good afternoon. Ladies and gentlemen. Thanks for attending this call. I'm Rodney sex Hills in Strasburg chairman president with me as his Tom Kelly. I figure of our life on it before we begin. I'd like to remind listeners that certain statements made you in this call May constitute forward-looking statements within the meaning of section 27A of the Securities Act of 1933 as amendments and section 21e of security exchange Act of 1934 is ammended and are based on currently available information regarding the expectations of management with respect to revenues profitable a 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 the school. Please refer to our filings with the South

He's in Exchange Commission including our most recent annual report on form 10-K filed on February 28th, 2019 and are most.

Recent quarterly report on form 10-q filed on November 7th 2019, excluding 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 statements with as a result of new information future events or otherwise an explanation about non-gaap measure of gross sales and certain expenditures, which maybe mentioned during the course of the score is provided in the notes and designated with asterisks in the office consulted statements of income and other information attached to the earnings release dated February 27th, 2020 a copy of this information is also available on our website at m.com in the financial information section. We are planning to leave some more time for questions on today's call and on subsequent calls with that in mind. We will not dead.

Many of the numbers covered in our earnings release consumer beverage preferences and tastes continue to evolve a turning increasing pace and we are endeavouring to address them through our ongoing innovation of new products in the fourth quarter of 2019. Nit sales were one point out two billion up 10.1% from 924.2 million in the fourth quarter of 2018 adjusting the 2018 fourth-quarter for advanced purchases made following our November one 2018 price increase in the US as well as foreign currency movements net sales for the 2019 fourth-quarter would have been up 7.5% diluted earnings per share for the 2019 fourth quarter increased 9.7% to $0.47 from $43 in the fourth quarter of 2018. According to Nielsen report for the 13 weeks through January twenty five twenty twenty four all Outlets combined and then we convenience grocery drug, Mass.

dazzo's sales in dollars in the

Drink category including energy shots increased by 7% versus the same period of year ago sales of the company's energy Brands including rain grew 3.7% in the 13 week. Sales of monster would down 3.9% sales of knowledge decreased 4.3% and south of Full Throttle decreased 13% sales of Red Bull increased 5.5% song Rockstar decreased by 7.4% sales of $5 decrease 5.5% in sales of decreased 37.2% as we know comparable sales of our own product last name is not referenced right according to Nielsen for the 4 weeks ended January 24th, 2020 South in the communes and gas Channel including energy shots in dollars increased 5.7% over the same period the previous year sales of the company's energy Brands which include rain grew 4.1% in the four week period in the convenience and gas Channel sales of monster decreased by 4.2% off.

the same. The previous year North

Down 4.9% and Full Throttle was down 13.3% sales of Red Bull up. 5.9% Rockstar was down 8.6% 5 hours down 5.85% and amp was down City 1% According to Nielsen for the four weeks end of January twenty five twenty twenty the companies market share of the energy drink category in the convenience and gas chamber shooting energy shots in dollars decrease by 2.6 of a point over the same period the previous year to 14.8% monster share decreased three point four sharepoint's to 33.2% rain. She was 3.4% nazish a decline point four of a SharePoint to 3.5% and Full Throttle share declined point two points to 0.8% off red bull shit increased zero point one point to 33.4% Rockstar. She was down point nine points to 5.5% wage.

$5 she was lower by points.

7.2 at 5.6% and am share decreased for two points 2.4 of a percent VPX bang Che increase two points to 7.6% off according to Nielsen for the 4 weeks ended January twenty five twenty twenty sales of coffee plus energy drinks which includes Cafe monster and expresso monster in dollars in the convenience and gas Channel increased 6.3% over the same period the previous year sales about Java monster alone were 5.5% higher than in the same. The previous year sales of our coffee plus energy drinks with 2.7% of all sales are Starbucks energy with 15.2% higher our company share of a copy plus energy category which includes Java monster Cafe monster expresso monster Starbucks on a triple shot Rockstar roasted and bang keto coffee for the 4 weeks ended January twenty five twenty twenty was 52.6% down 4.9 points. Java monster Sharon dead.

For the four weeks into January 25th.

2020 was 49.2% down point four of a point while Starbucks Energy share was 45% up 30.5 points. According to Nielsen dead in the convenience of gas channel in Canada for the 12 Weeks end of January 4th, 2020 the energy drink category increased 5% in dollars sales of the company's energy. Drink Brands were flat versus a year of the market share of the company energy. Drink Brands was 37.1% down two point two points monsters market share decreased 1.7 points to thirty three point two nozzles sales decreased by 8% and its market share decreased point to share points to 2.7% Full Throttle sales decreased 10% and its market share decreased by three points to 1.2% off Red Bull sales increased 7% and its market share increased point four points to 36.2% Rockstar sales increased 6% and its market share increased point to age.

to 16%

According to Nielsen for all Outlets combined in Mexico the energy drink category grew 20.9% for the month of December 2019 monster sales increase 11.9% gain market share in value decreased 2.3 points to 29.3% against the comfortable. The previous year sales are burned down 77.5% Burns market share decreased 1.2 points 2.3 of a percent Red Bull sales decreased 8.1% and its market share decreased by 2.5 points to 7.8% for very 1 a.m. Sales decreased 5.3% and its market share decreased by 6.7 points to 24% volts sales increased 47.2% and it's Market wage increased three checkpoints to 16.8% while boost sales decreased 5.5% and its market share decreased 2.2 points to 8% ampere and affordable log.

cheap brand launched in

March 2019 increase its market share to 9.4% in the month of December 2019. Coca-Cola energy market share was 3.5% in the month of December 2019. The Nielsen statistics were Mexico cover single months, which is a short period that may often be materially influenced positively and negatively ourselves in the oxide convenience change, which dominates the market sales in the Oxford convenience chain in turn can be materially influenced by promotions that may be undertaken in that Chain by one or more energy. Drink friends 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 2019 compared to December 2018 monsters retail marketing value increased in Argentina from 16.9% to 33.5% in Brazil from 19.6% wage.

27.4%

And in Chile from 34.9% to 39.8% I'd like to point out that the Nielsen numbers in emea should only be used as a guide because the change is Red Barn Nielsen 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 Thirteen. We came into January twenty five twenty twenty monsters retail market share in value as compared to the same period the previous year Grew From 12.7 to 12.8% in Belgium from 24.8% to 28.2% in France from 16.4% to 17% in Germany from 20.3% to 21.5% in Great Britain from 17.8% to 24.9% in Norway from 31.7% to 34.5% in Spain, but declined from Samsung.

43% 6.1

Change in the Netherlands and from 13.8% to 12.8% in Sweden, according to Nielsen in the 13 week. Ended in December 2019 monsters retail market share in June as compared to the same period the previous year Grew From 13.3% to 13.6% in the Czech Republic from 33.6% to 34.7% wage increase from 18.8% to 23% in the Republic of Ireland from 18.1% to 20.6% in Italy and from 10.95% to 14.5% in Poland and from 15.8% to 17.4% in South Africa.

According to iri in Australia monsters market value for the four weeks end of December 29th 2019 increased from 7.9 seven point five percentage to 9.3% as compared to the same period the previous year Mother's Market share in value decreased from 13.5% to 12.5% during the same. I'm going to New Zealand monsters market share in value for the 4 weeks ended December 29th, 2019 increased from 5.6% to 6.3% as compared to the same period the previous month plus market share in value decreased from 8.5% to 8.2% and Mother's Market share in value increased from 7.8% to 9.6% wage. According to Nielsen in South Korea monsters market share in value in all Outlets combined for the quarter ended December 2019 Grew From 37.6% to 50.6%

As compared to the same.

Period in the previous year monster is now the leading energy brand by market share in value in all outlets in South Korea. According to age in Japan monsters market share in value in the convenience channel for the 13 week. End of December 13th, 2019 Grew From 46.7% to 54.2% as compared to the same period in the previous year. We're getting pulled out that certain Market statistics that cover single months or four-week periods. May often be materially influenced positively and negatively by promotions or other trading factors down those.

Need sales to customers outside the three hundred nineteen point six million dollars Thirty 1.4% of total net sales in the 2019 fourth quarter compared with 2,000 to 74.3 million or 29.7% of total net sales in the corresponding quarter in 2018. Foreign currency exchange rates had the effect of decreasing net sales in US Dollars by approximately 9.1 million dollars included in reported Geographic sales or ourselves to the company's military customers, which I delivered in the page and grand ship to the military and their customers overseas in supply chain and production issues have largely been resolved in the net sales in the fourth quarter increased 8.6% in dollars and increase 12.8% in local currencies over the same period in 2018 growth profit in this region as a percentage of ninja

For the quarter was 38.7.

Percent complete 42.1% in the same quarter in 2018 gross profit percentage for the region was impacted by country and product mix. We also pleased that monster contract to perform well and gained market share in Belgium Czech Republic France Germany Great Britain, Greece Italy Norway Poland public violence South Africa and Spain in asia-pacific net sales in the fourth quarter increased 49.9% in dollars and 47.9% in local currencies over the same period in 2018, gross profit in this region is the energy of net sales was 40.2% versus 46.1% over the same period in 2018 as a result of country and products in Japan net sales in the quarter increased 84.2% in dollars and seventy 6.8% in local currency in South Korea. Net sales increased fifty wage.

25% in dollars and four

58.5% your local currency is compared to the same quarter in 2018 in Oceania, which includes Australia and New Zealand Tahiti French Polynesia, New Caledonia wage in New Guinea and Guam net sales decreased 4.1% in dollars and increase Ford eight of a percent in local currencies lowered like to point out that sells of the monster brand new age eighteen and forty 4% in dollars and 24.5% in local currency as compared to the same quarter in 2018 in Latin America, including Mexico and the Caribbean net sales in the fourth quarter increased 6.9% in dollars and 16.2% in local currencies over the same period in 2018, gross property in this region, as a percentage of net sales with was 42.6% compared to 44.7% over the same period in 2018 in Brazil wage.

sales in the quarter increased by

5.8% in dollars and increased 44% in local currency net sales in Chile decreased 14.8% in dollars and Seventeen month. Sorry 7.6% in local currency in the quarter in January. 2020 Monster Energy was launched by the Coca-Cola bottler in Israel. We continued Thursday. We continued the rollout of monster across India and began the launch of mango Loco in December. We also continued Ultra whites expansion from September's launch out further provide a broad portfolio with strong taste experiences for Indian consumers, the monster range continue to build significant active distribution increases across China in the 2019 fourth quarter versus a year ago, but the situation in China is currently challenging. I wanted to provide an update regarding the recent coronavirus or covert nineteen outbreak wage.

first of all a number one

Priorities the safety of our employees in China. We are thinking of everyone has been affected by coronavirus and we continue to monitor the situation closely in addition to having employees in China. We and our suppliers currently Globe lease or certain ingredients from third-party manufacturers in ruin and other parts of China. We also manufacture finished goods through third parties are closed and co-packers in China. The Corona virus outbreak could adversely affect our business and cause disruptions internationally due to the closure of suspension of activities wage is third-party manufacturers as well as within China at Arco packing facilities and our China offers ingredient sourcing delays could also interfere with a delay production of certain of our products internationally in addition the outbreak together with any accompanying special government measures could adversely affect the growth of our business in China and the victim on phone number.

Product. However, it's too early to determine what impact it will have on our Global supply chain and our operations.

As I said before our first priority is employee safety and we are continuing to monitor. The situation closely will now briefly discuss our litigation with Viper Pharmaceuticals Inc. VP. The maker of bang energy drinks monster father lawsuit against VPX in September 2018 for false advertising VPX filed a trademark lawsuit in March 2019 a monster in relation to our rain total body fuel high performance energy drinks and another law suit suit in August 2019 against monster alleging a host of legal challenges including many similar to the claims monster alleged against to bbx. These proceedings are ongoing in October 2019. The US District Court denied VPX is motion for a preliminary injunction against the rain total body fuel high performance energy drinks in its trademark lawsuit in its decision the Court ruled that VPX failed to meet any of the elements of a preliminary injunction and felt his own no.

You said these locked locked need to succeed?

On the merits of its claims in October 2019 VPX announced its intention to launch its own line of rain branded energy drinks in Sixteen ounce cans to be sold in convenience stores later that month. We followed an expedited motion for a preliminary injunction asking the court to stop this product launch and prevent from infringing monsters trademark rights in this way in November 2019 VPX stipulated that it would refrain from launching such products until the district judge entered a final order on the preliminary injunction Motion in January 2012. Magistrate Judge issued a report and recommendation that in an injunction that an injunction be granted in Monsters favor motions for summary judgment have been filed by monster in this proceeding and Thursday are currently pending in the event that summary judgment is not granted the Metra schedule for trial in May 2020 as this litigation other pending proceedings for the dbx or subdued. Ikeja.

We will not be answering any.

Options on this matter on today's call in October. We launched Java monster Farmers out which contains in his out first plant-based coffee product being nandhini and vegan as well as two new flavors in the rain Brand family strawberry Sublime and mango Matic to supplement our orange dreamsicle line extension, which was launched at the end of the third call back during the fourth quarter of 2019. We also extended Ultra Paradise rain metal Mania and rain razzleberry in multipacks in 2020 in the United States. We will be discontinuing Our Cafe monster line of products and repositioning our Express a monster line. We launched rainy and no thermogenic fuel in jalapeno strawberry. May I get a true-blue at the end of January 2020. We launched manga larga in Argentina during the fourth quarter of 2019 in Puerto Rico in January 2020. We launched rainstorm.

Re Sublime and mango medic as well as muscle monster vanilla and chocolate.

We launched Monster Energy Monster Energy. Absolutely zero and Monster Energy Valentino Rossi in Israel in January, 2020 monster Pacific punch was launched in Belgium Great Northern Ireland the Republic of Ireland in January 2020 and is planned to be launched in to a further seven markets in 2020 monster pipeline punch will be launched in the baltics and not this year and will then be available in 17 markets across emea monster Ultra Paradise was launched in Great Britain and Northern Ireland and the Republic of Ireland in January 2028. And in Sweden in February, 2020 and is planned to be launched into a further 18 markets throughout 20/20 express. Our monster was launched in Belgium the Republic of Ireland and Poland in the fourth quarter of 2019 in both milk and vanilla variants. We also launched both variants in the baltics the Netherlands in Portugal in January, 2020 and in Australia in February month

320 Express

Smoking but another variance are now available in 14 markets in emea. We are planning to roll-out to Flavors of expresso monster into a further nine markets throughout 2012 edition. Additionally, we have launched Express amongst the salted caramel in Germany and Great Britain in December 2019. We are planning to roll-out are salted caramel expressive variance in the further five-year me a market throughout twenty-twenty rain was launched in Great Britain and Northern Ireland and the Republic of Ireland in the fourth quarter of 2019. And we bought a Ranger launch rain in Germany by the end of the first quarter of 2020. Additionally. We are planning to launch into a further seven markets throughout 2020 monster hydro sport going to Germany Great Britain and Northern Ireland and the Republic of Ireland in the fourth quarter of 2019. And in France in January 2020. We are planning to launch Hydra sport in New Jersey.

white and Sweden by the end of the first quarter

Sure of twenty-twenty we launched credit app are affordable energy brand in Kenya and Uganda in the fourth quarter of 2019. Additionally. We launched predator in Poland in January 2020 and are planning to launch predator in Afghanistan Czech Republic and Hungary in the first quarter of 2020. We also planning to launch Predator into a further eleven markets throughout 2020 Azerbaijan Belarus, Bosnia, Croatia, Ethiopia, Iraq, Russia, Slovenia, Nigeria, the Netherlands and the UAE. We lost money mother epic. Sorry mother epic swirl in Australia during the fourth quarter of 2019 with a convenience customer before a national launch in January 2020 monster mule. Also log in Australia in January 2020 in South Korea. We further expanded pipeline punch to 90% of convenience stores with initial positive results.

We launched manga larga in India during December and completed Austra Watts roll out in India Vietnam and Malaysia during the 2019 fourth-quarter. We are planning to launch a number of products in asia-pacific the upcoming months including a full country relaunch of pipeline punch in Japan in March, 2020 and Ultra Paradise in South Korea and Japan later this year. We estimate January 2020 gross sales to be approximately 15.3% higher than in January 2019 on a foreign currency adjust our prices January 2020 groseilles would have been approximately 15.7% higher than comparable January 2019. Gross sales January 2020 had the same number of selling days then in January 2019 in this regard we caution again that sells over a short period often disproportionately impacted by various factors such as for example

selling days days of the week we

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 I bought those are responsible for production and you need actually determine their production schedules which affects the dates on which we invoice search bottlers as well as inventory levels maintained by our distribution Partners, which they alter unilaterally for their own business reasons. We reiterate that sells have a short. Such as a single month or even two months should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future. In conclusion. I'd like to summarize some recent positive points retail sales statistics for many countries around the world demonstrate. The energy category is continuing to grow that monsters generally growing ahead of the category in line with earlier periods new additions to the monster family dog.

Can you add to the company sells we are excited about the prospects for Our Brands and our new product launches this year as well as the Innovation pipeline in 22.

20 or encouraged by the prospect for our rain total body fuel high performance energy drinks and raining Firma Inferno thermogenic fuel high performance energy drinks, not only within the us but also internationally, we are pleased with our growth and performance, you know, International markets need sales in the fourth quarter. In fact increased to 12.8% in local currency in asia-pacific increased 47.9% in local currency and in Latin America and the Caribbean increased 16.2% in local currency, we reiterate the growth potential for us in China and India, we are proceeding with our plans for future launches of our affordable energies thousands internationally. We are also proceeding with our plans for the launch of rain total body fuel high performance energy drinks in certain countries outside of the USA. I would like to open a gym.

for two questions about the quarter and the

we will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the key to withdraw your question, please press * then two due to time constraints. We ask that you please limit yourself to one question. If you have further questions, you may re-enter the question Q. At this time, we will pause momentarily to assemble our roster.

And our first question comes from Dora of Morgan Stanley, please go ahead.

Hey guys, I drive a soda gross margins returned to your over your expansion in the quarter after fairly significant compression. Generally the last couple of years so I can you just discuss some of the key factors that drove that sequential year-over-year Improvement before and if you think those factors are more sustainable as we look out 2020 and that's just on the front. Can you discuss your shell spaced-out look particularly with the coke energy launch and if you think you've seen any marketshare impact from the coke energy launched so far. Thanks. So maybe I can address the gross profit issue that you referred to. So if you look at worldwide what the positive factors worldwide, obviously the price increase in the US and Canada and then product makes particularly with rain, which club

Say it's better growth.

Large and some of the juice and coffee products. We also benefits in fact in because we would we were manufacturing jobs the monsters domestically and we weren't supporting from the US and aluminum and other raw materials were a positive effect. So that that was the positives wage against that we continually to have and you'll see the gross margins that we refer to on this call against that you'll continually see a change in the Strategic Brands versus the monster products and the Strategic bands because they are concentrates. They have higher margins. Then you finished goods products. So that's you'll continue to see that as an offset. You'll continue b c Geographic mix as an issue because obviously in the US emerging

less strong in

In other parts of the world for all the reasons we've spoken to in the past and you'll see the same Trend with regard to product mix as we sell internationally as we sell more juice products and more coffee products. They have a lower margin than the traditional monster products and Rain products. So that's in a nutshell where we are with with money.

Our next question comes from Andrea texiera of JPMorgan, please go ahead. Hi. Thank you for taking my question. If you can comment on how the lounge is in particular training journal and how incremental it has been to your quarter today update. It has a follow-up to your coronavirus commentary obviously safety is the most important at this point. But what is your view on the monitoring California and overall changes in Mobility? Have you seen any great impact and convenience stores so far against other channels off? Thank you. I'll just take the Inferno has been really well received the initial, you know, it's really dead YouTube to tell but the sales have been good the line extensions that we introduced into the rain line including particular orange. Dreamsicle have also been dead.

Well received so the numbers are looking really positive for orange creamsicle and the other new product.

As well as writing so and he does really we've had some good response both to the concept of the thermogenic Inferno products as well as to the to the actual flavors. So LX if you look at for example, what's happening in China, we seeing obviously a significant foot traffic decreasing in the bigger stores and the convenience stores have they they have and are suffering but not to the same degree wage. So if you translate that back to California, we haven't seen any implications yet. But you know, the the whole idea of wage, um, the situation in China is that they limit the number of Shoppers in particular stores. So that's why you'll see, you know, reduce foot traffic in the bigger stores and moorcock.

Traded foot traffic in the in the convenience stores, but we haven't seen any implications of that at this time.

and

And you know if I could just talk about the coronavirus for one second I've been asked and I haven't really answered it because I was waiting to answer it on the call back and we don't normally give numbers sales in various countries. But what I can tell you is that our sales in China in 2019 were less than 1% off. All the Consolidated net sales for the for the the company so that puts a little bit in perspective cuz it was a little bit of nervousness, but it's less than 1%

Our next question comes from Steve powers of Deutsche Bank, please go ahead. Yes. Hey, thanks. So Hilton last month in New York. You acknowledged as a potential. Thank you. Thank you for having those issues of focus as Coke bottles were taken on coke energy and and bring it to the market in the US it just I guess some update there and how you're feeling about those bottlers execution on your Brand's now that wage of months into into the year the January numbers imply that you've had some good uptake of that Innovation, but just any color around that and around the in Market execution that you're seeing wage would be great. And then just just to give voice to question. Dara had asked that I think we might have lost sight of just, you know, just any any additional caller on the the the cooler and she'll set redesigns as them being up in the US. Are you getting the positioning that you thought you would is Coke energy getting the position that you thought it would relative to yourselves and Red Bull and others that too would be great. Thank you. Okay, so yep.

You know.

The situation with our bar is always going to be a challenge now and and we know that and we've working with all of our partners and our field teams and Five Guys in the street are working very closely to ensure that we get the right type of representation on shelves. The anecdotal information that I've seen is that Coca-Cola energy took off and unfortunately or fortunately there doesn't seem to be a very strong amount off repeat purchases. However, you know, they they will continue We Believe to spend significant amounts of of dollars on their products and see what we have to do is what I'll probably be said in New York and I'll say it again we have to stay true to our last and ensure that our products get the right representation in the stores.

and

That we done suffer the issues of shelf space that for example, we experienced in Australia and we we we alluded to that in our presentation as well. But the the news of today is that Coca-Cola energy has been in its current form has been discontinued from the two major retailers in Australia.

I could just prep just add a little bit on that on the color. We've looked at some of the schematics that have come come out for the this year in the US which is the obviously the place where Coke energy has recently been launched and if we look at the schematics with that plus obviously the performance Energy Products by and large we are getting increased shelf space both for our general products as well as our rain projects and and the infernal including our Innovation and perhaps if we look back on 19 some of the Innovation that we introduced didn't quite get the real estate wage distribution levels that we had hoped for and every thought and and that probably you know was affected us a little bit in in the 2019 year, but if you look at the the new age

We have a really robot.

Pipeline of new product we have you know new Reign price Inferno. We've got ultragear Sonata Rosa in the ultra line that are two really good products. We have a nose turbo which is sort of a performance energy product to to help boost in Osmond. We've got our new hydra-sport SK use we have a new job or 3,000 line which has a higher caffeine content to compete with the Starbucks triple shot. So and I'm looking at the skews and we're getting a lot of good listings for the Innovation off. So hopefully, you know execution of our Toddlers and it just abusive Partners this year particularly on Innovation will be better and we are getting rid of extra innovation in many cases. We are getting the Performance Products onto an additional separate shelf in some cases. It's simply an expansion of and within the the energy set off.

Our next question comes from Kevin Grundy.

Jeffries please. Go ahead.

Thanks gud evening guys to very quick ones first one for Hilton the G&A in the quarter. This one's a big granular, but I think it needs to be asked to sort of explain the profit margin pressure in the quarters of gross margin better. But GNA was quite a bit higher even excluding the intellectual property claim. Can you talk a little bit about some of the drivers there? And I know you don't like the guides should we expect sort of normalization on that line item looking out for the balance of the year and then Hilton just on the performance segment understanding your comments are writing the Shelf space reset, but can we get home thoughts they're so bang obviously made a lot of noise, but the market share on that product is down about a point sequentially from where it was around the time of the launch of rain and when we look a combined market share of those two Brands being bang and rain, it's kind of hanging around in this 11% sort of area. So your updated thoughts on on on the outlook for performance for Thursday.

On 220 and sort of beyond that.

Are we sort of at a place where this 11% market share is kind of the right number or you think it goes beyond that and and and if so why so thanks for all that guy's. Okay. Well, well that's a lot of mouth off about twenty four questions. If we talk if we talk a little bit about I think we were satisfied with the dead GNA that was spending the quarter. You know, we were we were rolling off the NASCAR program and we have a big push into social media. And that was one of the big factors that we kind of were duplicating some of the social media costs in the in in in the court as we roll off the NASCAR program. So you won't see their nests copy them to the same degree in 2020. And then when when I look at, you know the rest of the g n a payroll is obviously increasing wage.

higher than ordinary

We would like but you know, we running and international business today that's growing and developing and you can see from the sales and the number of countries. We in fact that we have to support the organization. So quite a part from you know other small issues which or not small issues but other issues which you'll pick up. I don't want to go into them. Now. All I can tell you is that I think that apart from that that litigation which obviously we were really unhappy about but it's a you know the business in in in in the US and I always tell everyone I'm not a lawyer but you know, I listen to these juries and it's like, you know, it is what it is, but I'm satisfied that G&A is is is is is under control?

So sorry, the next question you asked was about the percentage of the performance Energy Products in in the US Bank. And yeah, sorry. Yeah, I'm sorry not to it was just basically broadly outlook for performance segment, which of course is made a lot of noise over the past year or two but bangs market share is now down about a point rain is 3 3 and 1/2. It's in that range and when you look at the combined market share of those two Brands, it's been sort of bouncing around this 11% sort of area. So where does that leave us? What's your outlook for performance energy. And what's it's worth category going forward. Thank you guys. I think he put up his hands. So I'm happy for him to take over or just looking at that section. I think they the section that that's you know, again, we call it the performance section. But really it's it's part of the energy category and it's it's really energy. It's a question of whether we can carve out additional space with rep.

Taught us to look at attracting, you know increased.

Byers into the category and so I think that you are all we are seeing some increased buyers coming into the category and the the the cities suck starting to to to settle down now you're getting space allocated to bang space allocated to rain including Inferno. We're seeing a little bit of space being allocated to some of these pictures you've got rock star with this sort of line and they've come out with the synthetic line as well. And then you've got adrenaline shock and some of the smaller guys who trying to get space but I don't have the distribution depth Celsius and and see full so but we think it is panning out. So it's sort of starting to to to settle down May grow a little bit. But you know, we we certainly don't don't know we think that there is an appetite there is an increased consumer base through the different type of product that we're dead.

Using up for example through through Inferno, but we we do you know.

Be done give as I said, you know guidance. I think you know that and we certainly don't don't have a crystal ball. But we think that there is some positive growth that will be achieved in energy generally and I think that this this subset of of of of types of products within the energy category will will will grow a little bit and you you know, we're launching for example our hydro sport and that again is sort of an advanced hydration, but it does have BCAAs and higher caffeine. So a lot of products like that and turbo are starting to play into this area. It's just really I'm really just dividing up the attributes that consumers are looking for some consumers are looking for higher caffeine or and we think that that will help the whole category grow as with these specific products within the the category.

I can just add to that Kevin. I I'm a consumer of these products and not honestly believe the category is here to stay but where it will go. I don't think anybody knows. I think the main thing is that we have a number of skus that are addressing the category. We have some new product Innovation that's coming in terms of flavors. And you know, we we pretty excited about that whole performance energy part of the of the energy category, but it's one that's one part. There's lots of other parts to it as well.

Thanks. Our next question comes from Steve, please. Go ahead. Hey guys, how are you? I am confused. I am good. I'm good. Other than the stock market Hilton. I wanted to go back to gross. Margin. I know seem to have this question a lot of calls but International in particular, I guess how should we think about that going for I'm not asking guidance, but I guess it seems like with the pressure on the Strategic brand is having an outsized impact on that number. So as you go to the back half of Plenty, you start laughing these digit declines that you had in three two, and four Q. You're obviously watching Predator now I get that's not your launching Predator now, that's a concentrate model. So that should help wage.

How should we be thinking about kind of those moving Parts meaning as you laugh easier comparisons you get the benefits.

Predator should that help stabilize International gross margins candidate move a little bit higher if Predator Works in these markets, you know, maybe just a bit more color there in terms of the flicks and takes I'm thinking of our national margins will be helpful. Yeah. I think that as we look at the at the international business office we've spoken about the way the pricing structure works in those markets that we try and process those close to where are bullies and that we have different models of the boxes internationally that kind of force us into a different gross margin computation than we have in the US having said that, if I look for example at the margin which we discussed earlier on the call

And the margins there fell from 42% to 38.7% But there were a number of factors that went into Iraq, you know that that waiting to that that result firstly and and we've spoken about this before we have country mix we have brand mix we have product mix. So we we have a a very extensive product project now to reduce the juice content in a number of juice products to enhance margin, we have other projects and I just came back from the UK about two weeks ago where the whole meeting was just focused on margin focused on life focused on co-packers focused on you know, we're we're best to allocate our resources to try and improve the gross margins. Yep.

That we we have this concentrate and monster progression that of course will be resolved in in part when we able to get Predator up and running so often they were number of factors and then you always have one office in the quarter. So in the in the fourth quarter we had about a one percentage hit too gross margin in emea office, of course, so, you know, I think we very well aware from from this office of the need to improve margins and we are working on improving the margins within the constraints of the Strategic Brands having higher margins than the monster brand Brands and Rain Brands, obviously, our objective is to sell more Monster and Thursday. So more rain and you know, and and if if that takes away from the Strategic Brands then so be it because you know, this is the monster beverage Corporation. This is what time

Is is is is is to sell Monsta and and and really products.

So if the Strategic Brands will in fact, you know over time they may they may get hit we doing the best we can to, you know to to keep them at the current levels and and and improve on them. But you know, it's it's it's it's a mix and it will continue to be a mix and I'm not sure there's anything more cats out for it too much.

This concludes our question-and-answer session. I would like to turn the conference over to mister Saxon Mister schlossberg for any closing remarks. Thank you on behalf of months. 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 divorce and differentiate our friends 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 particular about New Opportunities. We have going forward with a portfolio of energy drinks throughout the world comprised of our Monster Energy brand together with the Strategic Brands as well as Hydro predator and rainy and the pretty extensive new innovation that we have its recently introduced and are planning to continue to introduce throughout the rest of twenty-twenty. Yep.

Very much for your attendance.

may now disconnect

The conference is now concluded. Thank you for attending today's presentation.