Q2 2020 Monster Beverage Corp Earnings Call

Welcome to the Monster beverage companies second quarter 2020 conference call.

All participants will be and listen to only about.

Did you need assistance place I go I called from specialists personally the star he followed by zero.

After three presentation there'll be an opportunity to ask questions.

So we're asking questions you my purse stars and one only touchdowns huh.

The majority of question. Please first starving too.

At a time constraints, we ask you let me yourself. So one question and you may rejoined the cute. So you have a second.

Oh, well now like the protocols this over to Mister Rodney Sucks Sherman and see Yo. Please go ahead Sir.

Good afternoon, ladies and gentlemen, thank you for attending the school Rodney sex Hilco Schlossberg I've watched chairman and President is on the cold as he used to them Kitty Abbas executive Vice President of to Finance, Tom Cat Evil now read off cautionary announcement.

Okay before we begin I would liked to remind listeners that certain statements made during this call may constitute forward looking statements within the meaning of section 27. Eight is the security is act of 1933 has Amanda and section 21 E have the security is exchange Act 19.

Three four <unk>.

And based on currently available information regarding the expectations of management with respect to revenues profitability future business future events financial performance and trends as well as the future impact of the Covid 19 pandemic now.

The company's business and operation.

Management cautions that these statements are based on our current knowledge and expectations and our subject to certain risks and uncertainties many of which are outside the control with a company that make it cause actual results to differ materially from the forward Lucky statements.

<unk> during this call.

They used to refer to our filings with the Securities and Exchange Commission, including our most recent animal report on form 10-K Wild on February 28, 2020, and our most recent Quirkily report on form 10-Q filed on May 11th 2020 <unk>.

Including the sections contained therein entitled to risk factors and forward looking statements for discussion on specific risk and uncertainties that may affect our performance.

The company is films no obligations to update any forward looking statements whether as a result of new information you to revenge or otherwise.

An explanation of the non gap measure of gross sales and certain to expenditures, which may be mentioned during the course of this call is provided in the notes and designated with Asterix and the condensed consolidated statements of income and other information attached to the earnings released dated August.

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Hey copy of this information is also available on our website www Dot monster Beth <unk> dotcom and the financial information section.

I would not like the hand, the call over to Rodney sex.

Let me begin ball striking that all thoughts and praise all with all who has been impacted bother cupboard 19 pandemic.

From the beginning of the cupboard, 19th pandemic I'll top priority has been the health safety and wellbeing of our employees.

[noise] is mentioned on our previous cool.

You know early March 20th 20th we implemented global travel restrictions and work from home policies for employees, who are able to work remotely.

Well those employees, who are unable to work remotely safety precautions had been instituted which were developed into dropped it in line with garden's from public health authorities and professional consultants.

Our offices have partially reopened in the United States and in certain countries and I'll feel sales teams are operating in the field without bottlers distributors and reach out is subject to safety protocols.

We are incredibly proud of the teamwork exhibited ball all employees co Packers and butlers and distributors around the world who are insuring the integrity of I'll supply train I'll flavour manufacturing facilities, all Coke Packers warehouses and shipment facilities or all operating.

Certain about Buttonless district, and distributors have implemented modifications to their cool points and service levels, but generally our products from mine available to consumers in limited countries. The operation was about botulism distributors have been more affected.

[noise], the cupboard 19 pandemic hadn't adverse impact on our niche in garage sales for the 2022nd quota in pot, Judy certain Nevada, bachelors and distributors, reducing their inventory levels. However, we did see is sequentially improvement in sales in the latter half of the quota certain countries and state.

<unk> began to gradually reopen.

Since mid March 20th 20th of company has seen a shift in consumer channel preferences and package configurations.

[noise] an increase in at home consumption and a decrease in immediate consumption ourselves in the second quota where you initially adversely affected as a result of a decrease in foot traffic and the convenience some guests channel, which is our largest channel but improved sequentially throughout the quota.

R E commerce clubs stole mass merchandiser and grocery unrelated business continued to increase in the quota wall out foodservice on premise business, which is a small channel for us remains challenged.

Currently we do not for C material impact on your brother to you about co pack us to a matter of fact, you and I'll bottlers and distributors to distribute Ah products as a result of the cupboard 19 pandemic.

In addition, we are not experiencing raw material finished product shortages, you know supply chain.

Once the energy cage philanthropic all continues to be actively engaged in the number of friends propaganda, that's including the 19th products to individuals working on the front lines. So I'd, just first responders health care workers hospitals and the National Guard.

Based on currently available information, we do not expect the carpet 19th pandemic Jasmine material impact on our liquidity.

And the second quarter of 2020 knit cells, <unk> 1.0, nonbelligerent compared with 1.1 billion and the second quarter of 2019.

Justin for foreign currency movements and itself for the 2022nd quota would've been up approximately one per cent.

It's a covered 19 pandemics impact was more pronounced in EMEA during the quota.

In particular the reduction in revenue from our strategic brands segment, what's significant as a larger revenue generating countries in EMEA experienced extended lockdowns.

[noise] riding income was 407.3 million up from 379 million in the second quarter of 2019 do you in parts to lower sponsorship endorsement costs of 19.8 million as well as lower travel and entertainment expenses of 10.1 million the cost for certain respond or.

Rescheduled events have been or maybe the food to future periods due to the uncertainty surrounding the Kobe 19 pandemic, we are unable to estimate in which future periods. If any such the food sponsorship endorsement cost will be recognized.

They didn't come increased 6.5% to 311.4 million as compared to 292.5 million in the 20th 19 comparable quota diluted earnings per shave for the 2022nd quota increased nonpoint, 9% 259 cents from 53 cents and the second quarter.

2019.

[noise]. According to the Nielsen reports for the 13 weeks through July 18, 2024, all athletes combined that'd be convenience grocery drug mess merchandisers sells indulge in the energy drink category, including energy shots increased by 7.6% versus the same period, a year ago shelves of the <unk>.

Energy brands, including Ryan we're up 5.8% in the 13th week period sells a monster we're up for 8% sells of rain were up 26.8 per cent sells of gnaws increased 1.6 per cent and sells a full throttle decreased point none of our percent.

South of Red Bull increased 17.3 per cent sells a rockstar decreased by 7.5% sells a five hour decreased nonpoint one per cent and sells a M decreased 10.8 per cent V. P X Bang saddles decreased 11.6 per cent.

According to Nielsen for the four weeks into July 18, 2020 cells in the convenience and gas channel, including energy shots in dollars increased 9.2 per cent over the same period the previous year. So I also the company's energy brands, which include Ryan increased five per cent and the full week period in the convenience and gas Chan.

Mm sells a monster increased by 5.6% over the same period versus previous Europe rain sells increased 2.5% gnaws was up 2.7% full throttle was down 1.4% sells a red Bull up 21.1 per cent rock star was down 6.9% five.

The hours down 4.1 per cent and Amp was down 5.8 per cent V. P X Bang cells decreased 7.2%.

According to Nielsen and the four weeks end of July 18, 2020.

Company's market share of the energy drink category, an inconvenience and guests channel, including energy shots in dollars decreased by 1.5 points over the same period. The previous you just 37.8% monster shade decreased 1.1 shape points to study, 1.1% Rainshade was 2.8% nauseous.

[noise] decreased 0.2 points to three three per cent and full throttle shade decreased 0.1 of a 0.2 0.7 per cent.

Red Bullshit increased 3.7 points to 37.3 per cent Rockstar. She was down 0.8 point is 249% five I wish it was <unk> six points at four six per cent and M. Shade decreased 0.1 of a 0.2 0.4 per cent Bang shade degree.

Just 1.3 points to 7.2 per cent.

What did you Nielsen for the four weeks end of July 18th 20, $20000 in the coffee plus energy drink category, which includes a Java amongst a law in in the convenience and gas channel increased 10.2% over the same period the previous your.

South of Java Monster with 24, 6% higher in the same period versus the previous Ya sells a Starbucks energy would 12.3% higher Java amongst a share of the coffee plus the energy category, which primarily includes Java Monster Java Monster 300, Starbucks double shots and triple shot.

Rockstar roasted in bank keto coffee for the four weeks end of July 18th 2020, with 51.1% five nine points, while Starbucks Your energy shade was 47 per cent 0.8 points Cafe Monster and express a monster I'd been discontinued in the United States.

According to stacked lawn.

Which tracks energy drink cells <unk> Amazon in the United States for before we period ending July 18, 20, $20000, you're in the energy category by Amazon, including energy shots increase to 190 per cent drive at the same period the previous year sells a monster increased 269.4 per cent and did shade.

It was 39.5%.

8.5 shape points versus the same period of the year ago Red Bull sales increased 172.4 per cent and did shade was 14.5% downpour non of a point Celsius <unk> sales increased 213% and it's Shay increased 0.8 of a 0.2 11.3 per cent.

Five hours sales increased 50.5% of need shade De-clawed 3.8 points 242 per cent V. P X bangs sales increased 66.1 per cent and shade declined 2.7 shape points to 3.7% Rainshade was 5.5 per cent and rock star She was one.

[noise] seven per cent.

According to Nielsen you'd all major channels in Canada, but the 12 weeks into June 30th 2020, [noise]. The energy drink category increased 6.8% in dollars sales of the company's energy drink brands increased 6.9% versus a year ago.

The mall computer of the company's energy drink brands was 37.8% the same as in the previous yeah monsters market share increased 0.2 of a 0.2 34.9 nausea sells increased 7.6% and it's marketeer remain the same at 2.1% full swatzell sales decaf.

21.2 per cent and it's market share decrease 0.3 of a 0.2 0.7 per cent.

Red Bull sales increased you live in 0.1 per cent and it's market. Your increased 1.5 points to 38.1 per cent Rockstars sales decreased 542 per cent and it's wakashan decreased 2.1 points to 16% Gurus sales increased 35.7 per cent and it should increase <unk>.

[noise] Overshade 0.23 0.2 per cent.

According to Nielsen for all athletes combined in Mexico.

Any drink <unk> do you live in 0.8% for the month of June 2020, [noise] Monster sales decreased 18.9% market share in value decreased 2.4 points to 27.8% against the comparable period. The previous you burn has been discontinued in Mexico Red Bull sells degree.

33 per cent and it's market share decreased by 1.8 points to 6.8 per cent V. They 100 sales decreased said he to <unk>, 0.6% and it's market. She had decreased by seven points to 22.5% vaults sales increased 0.2 of 'em per cent and it's <unk>.

<unk> 2.2 shape points to 18.8 per cent, while boose sales decreased pinpoint seven per cent and it's market share increased 0.1 of a 0.27, 0.4%.

Emphasis sales increased 269% and it's <unk> increased 7.5 points to 13.6 <unk>.

Coca Cola energies market share it was point, none of a percentage point <unk>, which was launched in March 2020 achieved a market share of 1.4%.

[noise] Nielsen's Statistics will Mexico Cup, a single months, which is a short period that may often be materially influenced positively Andrew negatively boss thousand the OXXO convenience chain, which dominates the market salves into auxo convenience <unk> giant intern can be materially influenced by promotions that may be undertaken in that <unk>.

By one of them more N as your drink brands during a particular month consequently, such activities could have any significant impact on the monthly Nielsen statistics for Mexico.

According to Nielsen for the month of June 20th 20th compared to June 2019, monsters retail market share in value increased in Argentina from 25.4% to city, 9.4%.

In Brazil from 21.1%, 230.4%.

[noise] chili from city, 7.4%, 244.9%.

So this the launch a monster energy in Argentina, and the first quarter of 2018 monsters now the leading energy Brandon volume in Argentina.

I would like to point out that the Nielsen numbers in EMEA. It should only be used as a guide because the channels Red barn Nielsen in EMEA vary from country to country and Ah reported on varying diets within the month refer to from country to country.

According to Nielsen in the surgery. We period ended mid June 2020, monsters retail market share in value as compared to the same period. The previous your group from 22.1%, 225.6% in Denmark grew from 28%, 224.8% in Great Britain.

Grew from 24, two per cent to 28.4% in Norway grew from 21.9% to 24.9% in the Republic of island grew from 32.2% said he 4.8 per cent in Spain and grew from 12, 48% to 13.8% in Sweden, but declined from.

13.1% to 12.5% in Belgium from 27% to 25, 9% in France and from 7.4 percentage of six three per cent in the Netherlands.

According to Nielsen and the 30 week period to the end of May 2020, monsters retail market sharing value as compared to the same period. The previous you grew from city for seven per cent to 35.2% in Greece from 13th 7% to 17, 70% in Poland from 16.4 to 17.7.

<unk> South Africa, while he's remain fletch at 13th three per cent in the Czech Republic, and De-clawed from 16% 15.1, presenting Germany and from 18.5 per sandwiches 16.8 per cent in Italy.

[noise] Nielsen numbers in EMEA, you should only be uses a god because of the channels Red bond Nielsen in EMEA vary from country to country.

According to IRI in Australia monsters market Shane value for the four weeks ended July 520, 20 increased from 9.4% to 11, 9% as compared to the same period the previous year mothers' market share in value decreased from 13 point Nonplus Angela to 13.3 per cent.

The same period.

Market share of the company's brands you know Australia for the four weeks ended July 520, 20 increased from 23.3 25.2 per cent.

What did you IRI in New Zealand monsters market share in value for the four weeks end of June 21, 2020 increased from 7.8 percentage of 10.4% as compared to the same period the previous year.

<unk> live plus market, Shane value decrease from 843% or to 7.1%.

Mother's market share in value decrease from 6.5% to six 4%.

What can share of the company's brands and your Zealand for the four weeks end of June 21, 2020 increased from 22.6% to 23.8 per cent.

According to Nielsen in South Korea monsters market cheering value and all the athletes combined for the month ending June 2020 grew from city, 9.4% to 53.3 per cent as compared to the same period in the previous your <unk>.

According to your <unk> in Japan Monsters mall can sharing value in the convenience store channel for the month of June 2020, De-clawed from 52.5% to 51.1% as compared to the same period in the previous Ya.

<unk> pointed out that suit market statistics that cup a single months Oh, four week periods, my often be materially influenced possibly Andrew negative reebok promotions or other trading factors during those periods.

[noise] knits elster customers outside the U S with 328.3 million, 30% of total net sales in the 2022nd quarter compared to 343.3 million or city, one 1% of total net sales and a corresponding quartering 2019, the decrease was largely.

[noise] due to the reduction of styles in EMEA during the quota.

Foreign currency exchange rights had defective decreasing knit cells in U S dollars by approximately 18.2 million in the 20th 20th sick and quota.

Included in reported geographic sales are ourselves to the company's military customers, which are the living in the U S and crawling shipped to the military and their customers overseas.

In <unk> <unk> and the second quota decreased 24% in dollars and decreased 15.9% in local currencies over the same period in 2019 gross profit in this region is sandage of knit sales for the quota was 38.1% compared to 39.5.

Sent in the same Quotidien 2019.

Gross profit percentage for the region was adversely impacted by foreign exchange rights country and product mix in local currencies gross profit is obscenity <unk> South Dakota was 39.4%.

The cupboard, 19th Pandemics adverse impact on itself was more pronounced <unk> for the three months into June 30th 2020, particularly in the strategic brands segment knit cells and EMEA will also adversely impacted by the reduction in inventories by certain about botulism distributors.

In addition to a lesser extent the trading dispute between Coca Cola bottlers in the European buying group, primarily in Western Europe resulted in the temporary delisting of some Coca Cola and Monster products, which has an adverse impact on knit cells in EMEA EMEA full the three months into June 2020, [noise], we are pleased.

And the second quota monster gained market share in Denmark, Great Britain, Greece, Norway, Poland Republic of Island, South Africa, spying and Sweden.

Asia Pacific knit cells, and the second quota increased 34% in dollars and 39% he local currencies over the same periods and 2019.

<unk> property in this region as a percentage of knit cells was 43.3%. This is 43.6% over the same period and 2019.

In Japan, knit, South Dakota increased 41.8% in dollars and 37.5% in local currency.

In South Korea knit sells increased 46, 9% in dollars and 55.7 per cent in local currency as compared to the same Coltrane 2019.

In China, and it sounds increased 66.9% in dollars in the quota and 74% in local currency as compared to the same courtroom 2019.

Oh, She Anna which includes Australia, and New Zealand Tahiti, French Polynesia, you Caledonia, Papua New Guinea, and Guam knit South decreased said, he 2.3% dollars and 24, 9% in local currencies sells a the monster brand decreased 25.6% in dollars and.

17 point Nonpersistent, he local currency as compared to the same quartering 2019, while the strategic brands in this region decrease at a foster right and it says in this region, where adversely affects it as a result of about Buttonless distributors.

Reducing their inventory levels.

That's in America, which includes Mexico in the Caribbean knit cells and the second quota decreased nine 7% $10 and increased 10.8% in local currencies.

Gross profit of the same period and 2019 gross property. This region as a percentage of in itself was 41.2% compared to 43.3% of the same pier eating 2019 in Brazil knit cells in the quota decreased by 1% in dollars, but increase.

The city 1.2 per cent in local currency knit cells, and chili increased city, 0.8% in dollars and 62.3% in local currency in the quota.

I will now briefly discuss I'll litigation with vital pharmaceuticals ink V. P X the make up a bank energy drinks.

Several proceedings are currently ongoing with V P X, including claims for false advertising and trademark and tried dress infringement brought by the company against V. P X and bought V. P X against the company [noise].

[noise] companies lawsuit for unfair competition false advertising and misappropriation of trade secrets schedule for trial in April 2021.

V P X as lawsuit against the company would you V. P X claim trademark infringement of the in Judea, Claude rain trademark and the company counter claimed for cancellation of they tried mark the district Court.

Judge ruled and the company's five in respect of the trademark infringement claims finding that the company had superior rot to the rain trademark in connection with energy drinks and canceling the rain trademark that V. P X had purchased.

V P X remains enjoined from selling Ryan branded energy drinks.

V P X as tried Gracie infringement claims in these proceedings all scheduled for trial at the end of August 2020.

Is this litigation and other pinion proceedings was V. P X O sub Judy K, we will not be all stirring any questions on this matter on today's cool.

In the United States Butler focused on Relaunching, I'll first quota product innovation, which <unk> plans would disrupted due to the cupboard 19 pandemic in Canada, we did not launch any new items within the second quarter of 2020 and continue to grow out distribution of old first quota 20th 20th <unk>.

<unk>.

In Honduras, we launched Fury goldstrike in the affordable energy category during April 2020, and even Salvador in early July 20th 20 initial results of being positive in June 2020, we launched ultra parrot Ossian, Argentina, and you put a rica. Additionally in June 2020 relaunched monster.

And go to I would go in Guatemala, El Salvador and Honduras.

In New Zealand relaunched Munster energy mule and mother tropical blast during April 2020, [noise] to sponsor locked down in the majority of EMEA markets for most of the second quota, we have still being able to introduce new products across EMEA.

<unk> Monster Pacific Punch was launched in spite in June 2020, and he's now available in 10 markets or cross EMEA and we plan to launch juice Monster Pacific Punch in an additional two markets in 2020 [noise].

Juice Monster pipeline Punch was launched in Romania in May 2020, and he's now available 21 markets across EMEA and we plan to launch juice monster popular and punch in an additional eight marketing 20th 20th.

Juice most of the manga logo was lost in Switzerland in June 2020, and he's now available you said he five markets across EMEA, we plan to launch juice Monster Mangalore <unk> in an additional 10 markets in 2020 [noise] <unk>.

Once the ultra Parados was lost in Austria, the Baltics and hungry in May 2020 in Denmark. In spite in June 2020 in Poland in July 2020, and he's now available in 14th EMEA markets and we plan to launch Monster Ultra Parados in an additional seven markets in 2020.

Monster milk and vanilla very and so now available in 20 markets in EMEA and we plan to launch express some more monster <unk> vanilla variance in an additional two markets in 2020.

Monster Hydro sport was Launceston spine in May 2020, and we plan to launch Monster Hydras sports and an additional market. In 2020. We also pleased with performance of rain and we planned to launch Ryan in an additional six markets in 2020.

Re launched Monster Myrlene, Poland in July 2020, and plan to loans amongst a meal in an additional nine markets in 2020, we launched predator a property affordable energy brand in Nigeria in June 2020. Additionally, we are planning to launch predator in Ethiopia, and the third quarter of 2020, we're also paying to.

<unk>, an additional six EMEA markets lighter in 2020, Bosnia Croatia, Gonna, Romania, Russia and Slovenia.

Currently innovation launches for all EMEA markets for the third and fourth quarters remain on track just bought the ongoing covered 19 pandemic. However, these launches will continue to be subject developments in relation to the cupboard, 19th pen to make any individual countries.

[noise] in Japan, we continued with the strong rollout of pot blond punch to 90% of the country and in June launched ultra Parados with solid consumer acceptance with strong innovation and continued growth about cool we have further bolts on a number one country shape position in value.

South Korea Monster energy <unk> number one shape positioning value and in June began shipments for the summer Twenty-twenty launch of Ultra Parados.

April 2020, [noise] began distribution of a new Munster energy Dragon T in China, which is known carbonated.

[noise] feedback from consumers has been positive.

This quota began shipments for a summer unpack promotion and we expect to further bold momentum with consumers in the retail tried.

India remains mostly in national locked down due to the Kobe 19, pandemic, which took effect on March 25, 2020, where appropriate a strong somehow unpack promotion, which should help reestablish momentum as the market I used to reopen in the third culture of 2020.

During the 2022nd quota, we purchased approximately point 3 million shades of common stock an average purchase price Oh 52 point I tried to push it for a total amount of 15.6 million excluding broke a commissions as of August for 2020, approximately 441.5 million.

Roommate available for repurchase under the previously authorized repurchased program.

We estimate July 2020, gross sales to be approximately 15.8% higher than in July 2019 on a foreign currency adjusted basis July 2020 garage sales would it be in approximately 17.1% higher than comparable July 20th 19 gross sales July.

Hi, 20th 20 had the same number of selling days is July 2019.

And this should God, we caution a guy and themselves Abbott a short period, often disproportionately impacted by various factors. So that just for example, selling dies days of the week and which holidays full timing a new product launches in the timing of price increases and promotions in retail stores distributor incentives as well as shifts and the timing of production.

Some instances, where bottlers are responsible for production and you need let really determine their production schedules, which affects the dates on which we invoice such spotless as well as inventory levels maintained bar distribution partners, which they also unilaterally for their own business reasons.

We'd reiterate that sounds over a short period, such as a single month should not necessarily be imputed to or go out. It is indicative of results for a full quarto any future period. In addition to Kobe 19 pandemic remains a serious concern if a covered 19 pandemic and related in a favorable economic conditions continue to intensify.

The negative impact on ourselves, including on your product innovation launches could be prolonged and may become more severe.

In conclusion, I would like to summarize some recent positive points [noise].

One the company's poverty has been in remains the health and safety of our employees to currently the company's flavor manufacturing facilities, It's co Packers warehouses and shipment facilities and Buffalo's and distributors. All operating three we are pleased with the new additions to the monster energy portfolio full well.

<unk> by the prospects for a rain turtle body feel high performance energy drinks and rain in phone the Magennis feel high performance energy drinks, we are planning for future launches of Ah right turtle Buddy fuel high performance energy drinks in certain countries outside of the U S.

Five we are pleased with the Rollouts a predator in theory, and all affordable energy drink portfolio internationally, we are proceeding with plans for future launches, although affordable energy brands outside of the United States. Six just bought the obstacles of a covered 19 pandemic. We are pleased with outperformance for the quota and for the first.

Half of the I'd like to open the floor to questions about Dakota. Thank you.

Thank you.

We will now be getting the question that you <unk>.

[noise] to ask questions Oh, My purse stars and one on your touched.

If you are usually speaker phone please pick up your hands that the hold precedent the keys.

[noise] if at any time of question husband address you'd like to withdraw your question. Please fresh dog too.

Did the time constraints, where you live in yourselves. One question and then you may rejoined the kids you have a sir.

At this time, we will.

Oh a roster.

Today's first question social engineer sure.

Yeah, Let's go ahead.

Thank you and I hope he oh well.

Cool, that's something resolved so like I remember you spoke.

Really answer the Alcoholics tag them in their lifetime, where their headquarters.

And then we have heard you are paying so lance huh uh-huh out there. So I understand that you have to postpone somebody's lounge.

But the question is do you.

Indeed, looking so long so how it's out there and then it. So when are you hoping to be able to see him onions, we've HM.

Andrea I think the the issue is you know there's been a lot of speculation about what we're gonna do both in the non alcoholic and alcoholic spices. We are looking at a number of Ah alternatives and opportunities and we may will do something in both of those spice.

<unk> <unk>, one or the other but we've not had made any final decisions. We are actually you know analyzing it weird we're looking at developing some products in both non alcoholic and alcoholic spices with testing products, but we haven't yet decided on on on on which which of those are we gonna go into.

We have for example, I know there's somebody analysts are picked up that we read just a different.

Names of products some of those names may be appropriate for us, but one of them more of these lonzo might not be we all looking obviously as part of the I'll planning, we all looking at availability of names that we think may be appropriate for four lines or leyden extinctions outside of the energy category in some cases some of those nice my will be used.

By us for for an alternative brand within the energy Spice I mean, it's it's a very.

Broad spectrum that'd be all currently investigating we've got Ah you know the right to do quite a lot. We are looking at how do we do it what <unk> what do we think will have the most impact for the company in the short term in you know both in the U S and as well as internationally. So you know there's been a lot of speculation and we all we all.

I'll definitely looking at us and evaluating it but we have not made any decisions. So at this point it is premature for us.

To give any indication to the market of what how plans all because we have not for him Doctor I'll blends internally ourselves yet there'll be no definitive decision on <unk> winter launch what to launch in under what brand names. Obviously, we are we.

Getting there were quite close, but we haven't got to that decision yet so I really can't give you an update other than to tell you that we all seriously you're looking at all those options as <unk> as I said, there's a lot of speculation about what are we gonna do because of the names.

<unk> marks we've applied to register and the different classes, but that is something that we are currently evaluating.

So I enjoy the only thing I would add to that is that we have a very strong innovation pipeline with existing business. So whatever we do in addition to that these rest assured that the company is a very interesting and very strong innovation pipeline.

Thank you. Our next question today sounds from next movie was RBC capital markets. Please go ahead.

Yeah, good afternoon, everyone alright.

Hey, how are you so I, just kind of one and a half classroom.

<unk> one question I mean, a nation just given how do we.

Oh thrown off killed too I'm, just <unk> now canceled I'm just curious how do you thinking about communicating your partner ideas and I think my blood will work and some kind of walk into fallen into the spring them extra <unk>, that's just kind of channels that.

That'd be the real question is C D D.

What's the company stands right now on that I mean isn't you don't have enough clarity, so really don't Wanna into that category or you know do you feel more comfortable now and he sat around that would be helpful.

Okay. So on the first question, we have a sales organization, who in the U S. Cool every single major customer and that's how we go about presenting a new product ideas on 121 basis.

So, but rest assured that innovation can be handled within the framework, although existing organization.

Outside in in particular in in Europe, and in other parts of the world to Coca Cola bottle is present Ah to customers with our attendance and they're very capable and they do display in your products and you put up innovations.

On your second point you know the.

The environment is actually not clear as to where we all and we we should be with CBD. So at this time you know we have products and development that we it's something that we looking at from you know from the sidelines and if things clear up and they'll pacitti jeez that will present them.

[noise] selves, that's something that we definitely will looking at getting food, but milkshake now.

Thank you. Our next question today comes from Peter Go, Though Bank of America. Please go ahead.

[noise] Hey, guys. Good afternoon. Thanks, they're taking the question just just wanted to ask you know on on July sales increase Rodney you know you mentioned that bottlers had taken down inventory, you know pretty low and a second quarter just.

How shall we look at it at July increase I guess from from an organic banana improvements standpoint persons Ah you know bottlers named reselling someone a pipeline after entertaining Tori Council al. Thanks.

And I don't think we've really had a good read get on with a Butler's of you know <unk> when that guy inches sort of you know get their imagery Liberals back to a previous pre covered Liberals if they if they do I mean people obviously looking at managing the rooms, you Liberals is talking to just like cat.

[noise] and taking things down they they they may.

He ended up being a little more aggressive obviously, we would like them to take some emergency Liberals up so that they just have more ability to to react in the market and and.

Because of the leap for lead Tom reasons, but you know I. So I didn't think that we've seen I I major restocking in in July. We've just you know again I think people are still cautious when they're trying to manage inventories in some cases, they try to many's or reduce some of the.

Focus on everybody to put it on their mind S. K I use and so some of the smaller risk I use it perhaps suffered a little bit as well during this period, but if you think those things will get back to normal logging, but I I don't believe we've seen I a substantial you know.

Jumped back in inventory levels in July I think that sort of a reason to be Ah.

You know normal trading for us no it feels or if you'd like to add something on that yeah, what what what I'd like to add is that you know depictions checking positive through July. So you know sales that I bought does make two retailers or checking positively and I'm sure they will come in.

[noise] time, when bottlers will revert to they probably inventories, but remember they look good for us.

Some bottlers has kashi shoes, the big a bachelors little good sales full cause they go generated both by their own full causes and by the computer full costing muddles. So they oughta in grilled cheese in accordance with those models. So you know you you remember when we spoke about at the.

On the law School, we spoke April was was down and we had a long and a robust discussion about that and we spoke about to patients.

And you know looking at this quota we've had we've had a strong July which is consistent with what's happened in the sequentially improvement through through May. So April you had that <unk>. We spoke about an uncle and then May and June we've had to sequentially improvements and we'd seeing that's.

[noise] Crenshaw improvement through July as well.

Thank you and our next question so that comes from a mortgage gonna start soon would <unk> Stifel. Please go ahead.

Hey, guys get afternoon, all as well.

I guess I'm curious on on U S I.

I don't know how to diplomatically ask the question, but maybe if you could touch on the engagement.

Coke system, both in terms of.

Selling your legacy product and the new product innovation, including to sell space for those obviously it was a little bit of a slower.

Start and <unk> in Red Bull due very well so maybe just touch on you know kind of where we are with with Reengagement. Both in leg as soon as well as innovation and how you'd think.

That should play out it yep.

Things get back from a blockly walking and actually standpoint sure trends actually improve things you can kind of how you think about that.

Smoke remember you know we coming out of 100 your opinion and you know there's been the doctors have all been operating and in some cases, the butler's have been focused on sending the foster sitting items I didn't really do you mentioned that earlier in the cool and they did not focus on the innovation.

<unk>, and the and and and and the excuse that you know not doesn't move as fast as the plaster sending on them. So we we we we've seen we've seen that we've seen some of the box is being affected by by the employees. My <unk> people remember who are out of the field until the last month.

So they know back in the filled with the appropriate safety protocols and people are working I'll feel people working with a boxes and the retailers two stole the innovation that you know had not been taken place. So you know red Bull.

[noise] interesting we've been watching the the girls to Red Bull as well and you know monsters thing you've seen the numbers and we spoken about the numbers today I heard about the numbers and nielson.

Real doing much faster than than than Red Bull in for example, Amazon.

Yeah they.

I have their own Salesforce <unk> distribution network who'd been able to execute pretty well in the trade the head to really good innovation as you cold watermelon, which is pretty popular so you know and balance I think they've probably you know Ah Ah Ah you know distributed us.

In terms of displays and.

I live points us of purchase on on on store shelves and and on the on the floor of the stores and that's something that we working too pretty aggressively without field people back in the stores to to regain so that's my kind of summary on we we are.

You know the issue with Red Bull.

Perhaps awkward just you know.

Just <unk> have.

A little bit of college, because I think it's obviously you know you're you're focused on this and some people have been seeing the numbers I think it comes down to during this period of time Red Bull really manage their own distribution system and they have dedicated and very focused person personnel Ah well I think when most of the big companies took her.

[noise] stepped back, particularly with their personnel in the field and they're cool points and active being active in the markets and the smaller and smaller mall, 'cause convenience and gas et cetera, and independence I think all of the bigger companies took took the photo for pedal and looked at protecting their employees and trying to do you know 2222.

<unk> I'll I'll belief is that Red Bull literally was probably the only company that didn't do that and actually had the teams in the fields Ah merchandising and and promoting and when you combine that focus together and and they they just their approach to to to the carpet pandemic as well as.

Together with the fact that they did have I flavor, they had risen nitrogen and did.

It was really well executed the introduction of it and it has really given them that Bruce that's really what we think as being the the real real difference, but that was all things that you know with a big company like like the Coke system. We I think they did step Beckett as as as most other consumer product companies did I think that will start you know.

[noise] reversing and that they're getting back into the field now we're getting out team into the field. We also put some of the up team out is Hilton said, you know you've gotta really.

I understand that and that's what I think it'd be one of the big the big reasons. We've got so I'm innovation lined up for the second half of this year, including something in response to the watermelon product and we will be launching that within the next few weeks.

Thank you. Our next question today actually I'm, so I'm Lauren right.

Please go ahead.

A good one everyone Ah and thanks for the question. So last time, we spoke I mean, you mentioned, that's because of Kobe 19, I mean retailers and it's specifically I mean, the convenience store returners doesn't reset Ah.

I mean death shelves for the summer.

There was a T. A focus for for you I mean to to make sure. That's you were able.

[noise] payments your your new innovation, So just curious I mean not.

In all your your reset her then.

I'll be <unk> reset I mean, not there yeah shelter and did you gain Ah shall space for you and did you get your your the performance energy.

And or either I mean name any any it shouldn't when I'm not returned or is that he to convert to to laundry shelves I'm <unk> I know, it's late in the summer but.

Because of Kobe 19, I mean, there was some debate once you have your take on these things.

Yeah, a lot of the retailers on merchandise by the bottlers <unk>.

So even though the space was allocated they may not have got to merchandise the products at the start of the of the resets. So we were at now as I mentioned learn that Ah guys are back in the field and they're working with a bottlers to ensure that all of our innovation.

It's the space that has been contextually allocated and you know just getting away from Ah you know, where we were in the in the early part of the pandemic, where you know it was hands off and your Bill if you look at how the convenience channel has grown and he's continuing to grow.

You know I think it's a fall cry from where we were in <unk> all in March and April and all of the started.

But you know that being said I think that you know it really isn't working progress I'd I think we've we've got to a point, where you could say that it's all it's all everything that was you know plant.

She's backing lawn and everything was achieved I think it's because it's out of cycle and because of the difficulties just little being face generally it is a slow you know.

If it is being done it slow but it it it is improving all the time, but I think it's still not it's not a lot. We we would like to see it but hopefully we will continue to improve as we go through the next few months.

It's it's it's a done for the most park, but it's the distribution actual physical distribution of the products on those sits on the shelves that I'll feel teams are working on.

Yeah.

Okay.

This is what it was the question the answers.

For them to call back over to my surroundings actually it's not all of ours.

Thank you Ah on behalf of Monstera I'd like to thank everyone for their continued interest and the company.

Continue to believe and the company and dark Red strategy and remain committed to continue mean to innovate develop and differentiate out brands and to expand the company bus at home and abroad and in particular expand distribution about product through the Coca Cola Butler system internationally, we believe that we will be able to navigate through the challenges ahead.

It is a result of the cupboard 19 pandemic and hope that that's unfortunate situation will resolve itself in the not too distant future. We believe that'd be all well positioned in energy drink category and continued to be optimistic about our turtle portfolio of energy drink brands.

I hope, we hope that you will stay safe and healthy. Thank you very much for your attendance.

Thank you Sir this ginsburg's today's conference call you made out of some extra lines and have a wonderful day [noise].

[noise].