Monster Beverage Corporation

Good day and welcome to the Monster Beverage Company First Quarter 2020 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key forward by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Rodney Sacks, Chairman and CEO. Please go ahead.

Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Milton Schottberg, our Vice Chairman and President, is on the call, as is Tom Kelly, our Executive Vice President of Finance. Tom Kelly will now read our cautionary statement.

Before we begin, I 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 Security Use 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, as well as the future impact of the COVID-19 pandemic on the company's business and operations. Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risk and uncertainties, many of which are outside the control of the company, that may cause actual results to differ materially from the forward-looking statements made during this call. Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10K filed on February 28, 2020, including the sections contained therein, entitled Risk Factors and Forward-Looking Statements, for discussion on specific risk and uncertainties that may affect our performance. The company assumes no obligations to update any forward-looking statements, whether as a result of new information, future events, or otherwise. An explanation of the non-GAP 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

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The following information is provided in the notes and designated with the following information. The company has always operated with co-leaders and I would like to thank Hilton and the leadership team for their leadership and support during this difficult period. To everyone at Monster, my sincere thanks and appreciation for all your efforts. From the beginning of the COVID-19 pandemic, our top priority has been the health, safety, and wellbeing of our employees. Early in March 2020, we implemented global travel restrictions and work from home policies for employees who are able to work remotely. For those employees who are unable to work remotely, safety precautions have been instituted which were developed and adopted in line with guidance from public health authorities and professional consultants. We are incredibly proud of the teamwork exhibited by our employees, co-packers, and bottlers distributors around the world who are ensuring the integrity of our supply chain. Our flavor manufacturing facilities, our co-packers, warehouses, and shipment facilities are all operating. Certain of our bottlers distributors have implemented modifications to their core points and service levels, but generally our products remain available to consumers. In limited countries which are smaller markets for us, the operations of our bottlers and distributors have been more affected. Since March 2020, while various markets have faced governmental measures, restrictions, and guidance in response to the COVID-19 pandemic, the sales and merchandising activities of our companies and the service levels of our companies have been modified. The impact of the COVID-19 pandemic on our net and gross sales for the 2021 quarter was not material. The company's April sales were materially adversely impacted by the COVID-19 pandemic. However, bottle and distributor sales of the company's product to retail in the United States were markedly less adversely impacted. Since mid-March 2020, the company has seen a shift in consumer channel preferences and package configurations, including an increase in at-home consumption and a decrease in immediate consumption. To date, our sales in the second quarter have been adversely affected as a result of a decrease in foot traffic in the convenience and gas channel, which is our largest channel, and food service on-premise. While our e-commerce, club store, mass merchandiser, and grocery and related business remain stable. Currently, we do not foresee a material impact on the ability of our co-packers to manufacture and our bottlers and distributors to distribute our products as a result of the COVID-19 pandemic. In addition, we are not experiencing raw material or finished product shortages in our supply chain. Monster Energy Cares, our philanthropic arm, is actively engaged in a number of philanthropic efforts, including donating products to individuals working on the front lines, such as first responders, healthcare workers, hospitals, and the National Guard. Based on currently available information, we do not expect the COVID-19 pandemic to have a material impact on our liquidity. In the first quarter of 2020, net sales were $1.06 billion, up .3% from $946 million in the first quarter of 2019. Adjusting for foreign currency movements, net sales for the 2020 first quarter would have been up 13.4%. Operating income was $365 million, up from $311.5 million in the first quarter of 2019. The increase in net income was 6.6%. The lower percentage increase in net income was primarily due to a higher effective tax rate in the quarter compared to the same quarter in 2019, primarily attributable to a decrease in the equity compensation deduction. Dilucid earnings per share for the 2020 first quarter increased .2% to $0.52 a share from $0.48 in the first quarter of 2019. According to the Nielsen Report, for the 13 weeks through April 25, 2020, all outlets combined, namely convenience, grocery, drug, mass, merchandises, sales in dollars in the energy drink category, including energy shots, decreased by .2% versus the same period a year ago. Sales of the company energy brands, including rain, were down .2% in the 13 week period. Sales of Monster were down 6.8%. Sales of Noz decreased 8.4%. And sales of Full Throttle decreased 12%. Sales of Red Bull decreased 1.8%. Sales of Rockstar decreased 11.5%. Sales of Five Hour decreased 14.2%. And sales of AMP decreased 26.8%. VPX Bank sales decreased 5.8%. Since rain had just entered the market at the end of March last year, we have not provided comparable sales for our rain products. According to Nielsen, for the four weeks ended April 25, 2020, sales in the convenience and gas channel, including energy shots in dollars, decreased .9% over the same period the previous year. Sales of the company's energy brands, which include rain, declined .4% in the four week period in the convenience and gas channel. Sales of Monster decreased by .9% over the same period versus the previous year. NOS was down .2% and Full Throttle was down 15.9%. Rain sales increased 27.4%. Sales of Red Bull were down 12.1%. Rockstar was down 21.8%. Five Hour was down 31.9%. And AMP was down 26.2%. VPX Bank sales decreased 30.3%. According to Nielsen, for the four weeks ended April 25, 2020, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, increased by 0.7 of a point over the same period the previous year to 41%. Monster share decreased 0.4 of a share point to 33.3%. Rain's share was 3.3%. Nozzles share remained the same at 3.6%. And Full Throttle share remained the same at 0.8 of a percent. Red Bull share increased 1.5 points to 34.9%. Rockstar share was down 0.4 of a point to 5.2%. Five Hour share was lower by 1.1 points at 4.6. And AMP share decreased 0.1 of a point to 0.4%. VPX Bank share decreased 1.4 points to 6.9%. According to Nielsen, for the four weeks ended April 25, 2020, sales of coffee plus energy drinks, which primarily includes Java Monster, in dollars in the convenience and gas channel decreased .3% over the same period the previous year. Sales of our Java Monster alone were .7% lower than in the same period the previous year. Sales of our coffee plus energy drinks were .7% lower, while sales of Starbucks Energy were .6% lower. Our company share of the coffee plus energy category, which primarily includes Java Monster, Starbucks Double Shot and Triple Shot, Rockstar Roasted and Bankito Coffee, for the four weeks ended April 25, 2020, was .5% up 0.4 of a point. Java Monster share on its own for the four weeks ended April 25, 2020, was .5% up 2.5 points, while Starbucks Energy share was .6% up 0.9 of a point. According to Statline, which tracks energy drink sales by Amazon in the United States, for the 13 weeks ended April 11, 2020, sales in dollars in the energy category by Amazon, including Energy Shots, grew .8% versus the same period a year ago. Sales of Monster increased .8% to a .8% share, up .5% share points versus the same period a year ago. Red Bull sales increased .7% and its share increased 0.5 of a point to 14.9%. Salthius sales increased .2% and its share increased 2 points to 11.4%. Five Hour sales increased .1% and its share decreased 2.4 points to 6.9%. VPX Bangs sales declined .4% and its share declined 5 share points to 3.4%. Rain share was .6% and Rockstar share was 3.5%. For the four week period ending April 11, 2020, according to Statline, in the United States, sales in dollars in the energy category by Amazon, including Energy Shots, increased .6% over the same period the previous year. Sales of Monster increased .5% and its share was 36.7%, up 1.2 share points versus the same period a year ago. Red Bull sales increased .2% and its share remained at 16%. Salthius sales increased .9% and its share increased 0.8 of a point to 10.1%. Five Hour sales increased .2% but its share declined 1.2 points to 6.9%. VPX Bangs sales declined .8% and its share declined 4.6 share points to 3%. Rain share was .9% and Rockstar share was 3%. According to Nielsen, in the convenience and gas channel in Canada, for the 12 weeks ended March 28, 2020, the energy drink category increased 3% in dollars. Sales of the company's energy drink brands increased 1% versus a year ago. The market share of the company's energy drink brands was .9% down 0.8 of a point. Monster's market share decreased 0.5 of a point to 33.9%. Nasdaq sales increased 4% and its market share remained the same at 2.9%. Full Throttle sales decreased 19% and its market share decreased 0.3 of a point to 1.1%. Red Bull sales increased 3% and its market share decreased 0.3 of a point to 35.1%. Rockstar sales increased 3% and its market share decreased 0.2 of a point to 16.3%. Guru's sales increased 75% and its share increased 1.5 share points to 3.7%. We have verified with Nielsen that their data from Mexico for the month of March 2020 did not fully capture all of Monster's sales. As a result, the Nielsen data is inaccurate and will not be covered on this call. We will resume reporting Nielsen data from Mexico once their data has been corrected. According to Nielsen, for the month of March 2020, compared to March 2019, Monster's retail market share in value increased in Argentina from .7% to 37.1%, in Brazil from .2% to .7% and in Chile from .9% to 41.4%. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA 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 13-week period ended April 17, 2020, Monster's retail market share in value as compared to the same period the previous year grew from .7% to .4% in Spain. According to Nielsen, in the 13-week period ended March 31, 2020, Monster's retail market share in value as compared to the same period the previous year grew from 12% to .6% in the Czech Republic, from .3% to .2% in Poland, from .4% and .8% in the Republic of Ireland, and from .3% to .7% in South Africa. Monster's retail market share in value as compared to the same period the previous year declined from 35% to 34% in Greece. According to Nielsen, in the 13-week period ended March 29, 2020, Monster's retail market share in value as compared to the same period the previous year grew from 18% to 20% in Italy. According to Nielsen, in the 13-week period ended March 28, 2020, Monster's retail market share in value as compared to the same period the previous year declined from .5% to .8% in Germany. According to Nielsen, in the 13-week period ended March 21, 2020, Monster's retail market share in value as compared to the same period the previous year grew from .4% to .6% in France, from 20% to .5% in Great Britain, from .8% to .7% in Norway, from .2% to .5% in Sweden, but declined from .2% to 13% in Belgium, and from .1% to .1% in the Netherlands. According to IRI in Australia, Monster's market share in value for the month ending March 2020 increased from .9% to .3% as compared to the same period the previous year. Mother's market share in value decreased from .4% to .2% during the same period. Sales of the company's brands in Australia for the month ending March 2020 increased from .3% to 23.4%. According to IRI in New Zealand, Monster's market share in value for the four-week period ended March 15, 2020 increased from .7% to .7% as compared to the same period the previous year. LivePlus' market share in value decreased from .5% to 7.7%, and Mother's market share in value decreased from .9% to 6.2%. Sales of the company's brands in New Zealand for the four-week period ended March 15, 2020 increased from .2% to 23.7%. According to Nielsen in South Korea, Monster's market share in value in all outlets combined for the month ending February 2020 grew from .5% to .3% as compared to the same period in the previous year. According to Intars in Japan, Monster's market share in value in the convenience store channel for the 13-week period ending March 2020 grew from .3% to .4% as compared to the same period in the previous year. During the latest four-week period ending March 2020, Monster's share in Japan grew from .5% to .6% as compared to the same period in the previous year. We again point out that certain market statistics that cover single months or four-week periods may often be materially influenced positively and or negatively by promotions and or other trading factors during those periods. Net sales to customers outside the US were 356.8 million, .6% of total net sales in the 2020 first quarter compared to 284.1 million, which is 30% of total net sales in the corresponding quarter in 2019. Foreign currency exchange rates had the effect of decreasing net sales in US dollars by approximately 10.4 million in the 2021st quarter. Included in reported geographic sales are our sales to the company's military customers, which are delivered in the US and transhipped to the military and their customers overseas. In EMEA, net sales in the first quarter increased .3% in dollars and increased .5% in local currencies over the same period in 2019. Growth profit in this region as a percentage of net sales for the quarter was .3% compared to .2% in the same quarter in 2019. Growth profit percentage for the region was impacted by country and product mix. We are also pleased that in the first quarter, Monster Gain market share in the Czech Republic, France, Great Britain, Italy, Norway, Poland, Republic of Ireland, South Africa, Spain and Sweden. In Asia Pacific, net sales in the first quarter increased .8% in dollars and .7% in local currencies over the same period in 2019. Growth profit in this region as a percentage of net sales was 42% versus .2% over the same period in 2019 as a result of country and product mix. In Japan, net sales in the quarter increased .7% in dollars and .1% in local currency. In South Korea, net sales increased .6% in dollars and 48% in local currency as compared to the same quarter in 2019. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Upper New Guinea and Guam, net sales increased .6% in dollars and .5% in local currencies. Sales of the Monster brand increased .5% in dollars and .3% in local currency as compared to the same quarter in 2019. In Latin America, including Mexico and the Caribbean, net sales in the first quarter increased .1% in dollars and .7% in local currencies over the same period in 2019. Growth profit in this region as a percentage of net sales was .5% compared to .6% over the same period in 2019. In Brazil, net sales in the quarter increased by .7% in dollars and increased .1% in local currency. Net sales in Chile decreased .8% in dollars and .2% in local currency in the quarter. This was due to timing of shipments and our retail market share and depletions remained strong. In the 2020 first quarter, we transitioned Trinidad and Tobago to the Coca-Cola Bottler. In addition, we began production with our bottler in Trinidad, which will allow us to supply other islands and countries in this region on a tax-efficient basis. In January 2020, Monster Energy was launched by the Coca-Cola Bottler in Israel. I will now briefly discuss our litigation with Vital Pharmaceuticals Inc., VPX, the maker of Bang Energy drinks. A number of proceedings are currently ongoing to adjudicate claims, including claims for false advertising and trademark infringement, brought by the company against VPX and by VPX against the company. These proceedings are ongoing. Our only update since our last earnings call is in relation to the lawsuit against VPX over its intention to launch its own line of rain-branded energy drinks in 16-ounce cans to be sold in convenience stores. On May 1, 2020, a district court judge granted a preliminary injunction in joining VPX from using the rainmark in connection with any -to-drink beverage. A motion for summary judgment has been filed by Monster in this proceeding against all of VPX's claims in the suit, with a hearing on that motion set for later in May this year. In the event that summary judgment is not granted against all claims in the suit, the matter is scheduled for trial in August 2020. As this litigation and other pending proceedings of VPX are subjudicated, we will not be answering any questions on this matter on today's call. We are working closely with our China team to follow the rules implemented by local authorities, and we have reopened our office in China. Monster shipments and distribution in the first quarter in China were negatively affected by the lockdowns due to the COVID-19 pandemic. This resulted in a volume decrease in the first quarter in China, but beginning in late March, early April, we have seen an increase in shipments and depletions. In April, we began distribution of our new Monster Energy Dragon Tea, which is non-carbonated and which has received early positive feedback. In addition, certain globally supplied ingredients sourced from third-party manufacturers in Wuhan and other parts of China have recommended shipping to our network of co-packers. During the 2020 first quarter in the United States, we launched a number of new exciting products, including a line of rain inferno, thermogenic fuel, two new energy drinks in the Monster Ultra line, a line of Java Monster 300, and a line of Monster Hydro Super Sport, as well as Noz Turbo. These launches were negatively impacted by the COVID-19 pandemic, and we did not achieve planned distribution levels, in part due to certain retailers postponing implementation of their new planned schematics, which included our innovation products. We are developing plans with our bottlers and distributors to re-prioritize these recent innovation launches to ensure that we are able to maximize their distribution as soon as normalcy returns, particularly to the convenience and gas channel. In Canada, our Monster Energy portfolio was extended in January 2020 with the launch of Monster Ultra Paradise, Java Monster Swiss Chocolate, Monster Hydro Blue Ice, Monster Dragon Green Tea, and Yerba Mate. We also added an additional flavor to our Noz Energy lineup with Noz Sonic Sour. In Mexico, we launched Predator as our first entry in the country in the value segment, and in Brazil, we launched our non-carbonated Monster Energy Dragon Tea, Lemon Tea, during March 2020. In Australia, we launched Monster Energy Mule nationally and rolled out Mother Epic Swell nationally in January, after an exclusive with a select convenience and gas chain launch in the fourth quarter of 2019. Juice Monster Pacific Punch was launched in Germany and the Netherlands in March 2020 and in France and Sweden in April 2020, and is now available in nine EMEA markets and is planned to be launched into a further three markets in 2020. Black Monster Mangaloka was launched in Russia in March 2020. Mangaloka is now available in 34 EMEA markets. Juice Monster Pipeline Punch was launched in Iceland, Malta and Norway in February 2020, and the Baltics, Denmark and Hungary in March 2020, and is now available in 20 markets across EMEA. Monster Ultra Paradise was launched in Germany and the Netherlands in March and in Belgium, Italy and Norway in April and is now available in eight EMEA markets. We are planning to launch Ultra Paradise into a further 14 markets in 2020 in EMEA. Espresso Monster was launched in Bulgaria, Cyprus, Greece and Switzerland in March 2020 and in the Czech Republic and Slovakia in April 2020 in both milk and vanilla variants. Espresso Monster milk and vanilla variants are now available in 20 markets in EMEA. We are planning to launch two flavors of Espresso Monster into a further two markets in 2020. Additionally, we launched Espresso Monster Salted Caramel in Norway in February 2020 and in Sweden in April 2020. We are planning to launch this product in a further three EMEA markets in 2020. Rain was launched in Germany in February 2020 and in Spain in April 2020. Additionally, we are planning to launch rain into a further six markets in 2020. Monster Hydra Sport was launched in Norway and Sweden in February 2020 and we are planning to launch Monster Hydra Sport in Spain late in the second quarter. Burn Dark Energy, our new Cyprus burn variant, was launched in Russia in March 2020. Two SKUs of the new Nalu Energy Tea Line, Green Tea and Ginger and Black Tea and Passion Fruit, were launched in Belgium in April 2020. We launched Predator, our affordable energy brand in the Czech Republic and Hungary in February 2020, Afghanistan and North Macedonia in March 2020. Additionally, we are planning to launch Predator in Ethiopia, Ghana and Nigeria in the second quarter of 2020. We are also planning to launch Predator into a further five EMEA markets later in 2020, Bosnia, Croatia, Romania, Russia and Slovenia. Similar to the United States, in a number of markets, our recent new product launches were negatively impacted by the COVID-19 pandemic and we are implementing plans to re-prioritize certain launches. In Japan, we successfully relaunched Pipeline Punch with strong results that built our number one country share position in value. In South Korea, we further expanded Pipeline Punch to 90% of convenience stores with positive results that also took Monster to a number one share position in value. The Monster portfolio grew strongly in both countries. We are planning to launch Ultra Paradise in both Japan and South Korea later this year. India followed up on the December 2019 Mango Loco launch and extended distribution nationally early in the first quarter before a national lockdown due to the COVID-19 pandemic which took effect on March 25, 2020. We estimate April 2020 gross sales to be approximately .2% lower than in April 2019. On a foreign currency adjusted basis, April 2020 gross sales would have been approximately .8% lower than comparable April 2019 gross sales. However, bottle and distributor sales of the company's products to retail in the United States were markedly less adversely impacted. April 2020 had the same number of selling days as April 2019. April sales were materially and adversely impacted by the COVID pandemic to differing degrees from country to country. We're optimistic for improvement once the COVID-19 pandemic subsides. Indeed, a number of US states have recently begun to partially reopen and certain countries internationally are starting to do likewise. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, 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 our bottlers are responsible for production and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers, as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales at a short period such as a single month or even two months should not necessarily be in future two or regarded as indicative of results for a full quarter or any future period. In conclusion, I would like to summarize some recent positive points. One, the company's priority has been and remains the health and safety of our employees, customers, consumers and our communities. Two, currently the company's flavor manufacturing facilities, its co-packers, warehouses and shipment facilities and bottlers and distributors are all operating. Three, we are pleased with the new additions to the Monster Energy portfolio. Four, we are encouraged by the prospects for our rain total body fuel high-performance energy drinks and rain inferno thermogenic fuel high-performance energy drinks, not only within the U.S. but also internationally. Five, we are pleased with our growth and performance both domestically and internationally during the first quarter. We reiterate the growth potential for us in India when the country reopens, as well as in China. Six, we are proceeding with planning for future launches of our affordable energy brands, as well as rain total body fuel high-performance energy drinks in certain countries outside of the U.S. Seven, this year in light of the public health impact of the COVID-19 pandemic, we will conduct our annual meeting on June 3, 2020, exclusively as a virtual meeting via live webcast. You will not be able to attend the annual meeting in person, but during the virtual meeting you may ask questions and will be able to vote your shares electronically. Additional information regarding attending the annual meeting, voting your shares and submitting questions can be found in the company's proxy statement. I would like to open the floor to questions about the quarter. Thank you.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Due to the time limit, please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. And our first question will come from Andrea Tixera with JPMorgan. Please go ahead.

Thank you and good afternoon, everybody. Rodney, I'm glad to hear you well and wish you good health to all on this call. How much has traditional channels and convenience and gas impacted the .8% effect of the decline globally in April? If you can break down the US against global, I appreciate the detail that you gave saying that the US was less impacted. I think that will be helpful for investors to figure out when the timing of COVID passes. And then the other thing I would like to clarify on the e-commerce performance. How much you gave and we appreciate that. How much would that represent now as a percentage of total sales? Thank you very much.

OK, so Andrea, good afternoon. Maybe I should deal with that question. So what we saw in April was a decline in sales, which we indicated. If you look at the Nielsen for all measured channels, we on these calls traditionally give the Nielsen for convenience. But if you look at the Nielsen for all measured channels, that showed a decline of 10.2%. Not only do we measure shipments, we also measure depletions. And depletions are the sales that the bottles and distributors sell to the various retailers. Depletions were largely in line with the Nielsen numbers for all measured channels. In fact, they were a little bit better. So I think what you're seeing in, and I'm only talking in the US, and I'll talk about EMEA, which is our next biggest market in a while. So in the US, what we saw was, I believe, and the numbers appear to verify that there was a reduction in inventories in the bottler network. Because shipments declined much faster than depletions and, in fact, the Nielsen numbers. So that's where we are in the US with our bottler and distributor business. With our direct business, you know, we have some direct business, the clubs, e-commerce, et cetera. That business was largely intact. So we didn't see declines in that part of the business. Also, what happened in April is that there was a lot of stock building and pantry loading that seemed to culminate in the last week in March. And in April, and if you look at April's sales week by week, our sales have improved week by week. And that's also true in EMEA, which is our next biggest market. So in EMEA, they didn't see the same degree of stock reduction by the barter's distributors. But what we have seen in EMEA, as the countries have opened sequentially, better performance week on week. For the rest of the business, Asia Pacific was up on last year, a marginally, and Latam was, well, I shouldn't say marginally, it was actually, it was up to a nice degree over last year. And Latam was in line with last year. So that's the issue from the US and from EMEA. And I hope that answered your question. So regarding the second question, and you kind of naughty because you only had one question, but on the second question about e-commerce, you know, we don't disclose those numbers. The numbers are available on Stackline. We don't disclose those numbers. But that market is becoming a very big market for us. And you could see from the indication on the call that our market share with Amazon is growing pretty significantly. Thank you.

And our next question will come from Mark Astrochan with Stiefel. Please go ahead.

Yeah, hey, afternoon, everybody. First of all, by the way, I'm making dinner for the kids while listening. So you guys are very fortunate. I guess I just wanted to talk a bit about some of the cost controls that seem to have occurred in the quarter. Maybe talk a bit about how to think about selling and G&A expenses in terms of how would some of this just response to what you had seen end of quarter, some of this because you didn't have NASCAR recurring and selling expenses. Why was G&A up a little bit less than we've seen? And I know you don't want to give guidance, but any sort of direction that you can give us in terms of how to think about those numbers for 2020. That would be helpful. Thanks.

So as we look at the year, particularly with sponsorships and endorsement, NASCAR has fallen away and we have other sponsorships and endorsements that may not cost the same this year as they did last year because a number of events have been canceled. So we don't give guidance, but I think it's, you know, as one reflects on the year, we can see a change in patterns in our spending. We've been spending a lot more on social media, which we believe is very important, particularly in this market that we are in. And we'll continue to spend in the markets as we deem appropriate.

Our next question will come from Peter Galbo with Bank of America. Please go ahead.

Hey, guys. Thank you very much for taking the question. I guess, you know, Rodney, as you mentioned, you know, some of the states are starting to reopen. What have you seen kind of from the core monster consumer, you know, in a more restrictive state, you know, like in New York or California where we're expecting kind of manufacturing and construction to come back online sooner? You know, that I would think would also kind of play more into your core consumer. Just anything you're hearing on the ground as states start to reopen more. Thanks.

I think that, you know, that's drilling down to a level that, you know, I don't think is appropriate. I don't think it's something we should be doing because there are so many variances from state to state and so many factors. I think you've got to look at it on a broader basis across the U.S. and also across the world because you look at individual countries and we're really not in a position to have analyzed each and every country and given you the percentage up or the percentage, you know, back to normal. I think it's just more anecdotal of a trend that we are seeing and it's starting to open and we're just saying, you know, we feel that when you look at the weekly numbers, as Dr. Hilton referred to earlier, you can see that there seems to be a trend that those numbers are improving on a weekly basis.

Thank you. The next question will come from Warren Grande with Guggenheim. Please go ahead.

Hey, good morning, everyone. And Ronnie, I'm very glad to hear that you're recovering from COVID. So keep safe. So I'd like to question you about the renewed competition in the space. PepsiCo in the quarter became a much stronger competitor with first the acquisition of Rockstar and I've heard the announcement of a distribution agreement with the U.S. Any comments on the move and how you are planning to adjust, maybe, to the EU landscape? I don't know if that should change the way you and Coca-Cola Company and its partners partner. Thank you.

Well, I think it's difficult to comment on Coca-Cola because we've always maintained a good relationship with the Coca-Cola Company, even during the arbitration proceedings that we had. We know that transitions generally are very disruptive. We've been through a number and we know how disruptive they can be. So, you know, that's we believe in the short term is an opportunity for us in the long term. It's difficult to comment because, you know, Pepsi-Cola has never really had success in the energy category historically, although they now have, you know, brands that are a lot more powerful than they had before. Rockstar has declined 50% since their, in market shares since their distribution agreement began in 2009. So it's really difficult to say, you know, I think that the short term will be disruptive and we've got plans both for the short term and for the long term. And I think it will be inappropriate for us to, you know, to disclose what those plans are. But rest assured, we do have plans and, you know, we believe we've got very strong brands and that we've got, you know, good marketing prowess and that the better brands will prevail in the long term.

Our next question will come from Neil Chappelle with SunTrust. Please go ahead.

Thanks. Good afternoon. Just following up on the, I'm glad to hear you're doing well, Roddy. Thank you. Just following up on the Pepsi side, less from what you were seeing, be it from Rockstar or Bang, because I think you've kind of already seen that. Are you expecting anything new out of Mountain Dew or seeing anything from that front now that it seems that Pepsi is a little more unleashed in what it can do on the energy sector?

Well, we haven't seen anything yet, but we are anticipating that, yes, that, you know, it was reported in the press that they were kind of hamstrung with utilizing the word energy on some of the other brands. And we believe that that's something that will happen in time. But, you know, honestly, though, we shouldn't conjecture on what they may or may not do.

Yeah, I would just like to add that, you know, a lot of these things on North and New, they have, you know, endeavored to play in that space through Kickstart and in the Mountain Dew range and as an extension. And, you know, so there'll be a little bit of a divergence, a tweak to that. They have already been, you know, building on what Hilton said, they've been distributing Rockstar, you know, for the last, you know, 10 years. So at the end of the day, you know, I don't think there's going to be much change. But again, we can't speculate to what effort they will put behind and for how long. But we do think that the Rockstar brand has some challenges and we think that we're in a strong position to address that and to address the bank position. I think that you've seen the market shares bang over the past 12 months and, you know, we think we're in a good position to continue to compete with them, regardless of the distribution system change. There are benefits, but there are also some negatives in that that come with that change.

So the one thing I would add actually to what we've all just said is that this result with Pepsico, I think, will galvanize us Coca-Cola and our whole barking system against the common enemy. And I think that's a very positive factor as well.

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Rodney Sachs and Mr. Hilton Schlossberg.

Thank you. On behalf of Monster, I would 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, develop and differentiate our brands and to expand the company both at home and abroad. And in particular, expand distribution of our products through the Coca-Cola bottling system internationally. We believe that we will be able to navigate through the challenges ahead as a result of the COVID-19 pandemic and hope that this unfortunate situation will resolve itself in the not too distant future. We believe that we are well positioned in the energy drink category and continue to be optimistic about our total portfolio of energy drink brands. We hope that you will stay safe and healthy. Thank you very much for your attendance.

And thank you, sir. The conference has not concluded. Thank you for attending today's presentation. You may now disconnect.