Hansen Natural Corporation Q1 2010 Earnings Call Transcript

Hansen Natural Corporation Q1 2010 Earnings Call Transcript
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Hansen Natural Corporation (HANS)

Q1 2010 Earnings Call

May 6, 2010 5:00 pm ET


Rodney Sacks – Chairman and Chief Executive Officer


Judy Hong – Goldman Sachs

Mark Astrachan – Stifel Nicolaus

Michael [Avery] – CLSA

John Faucher – JP Morgan



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Good day, ladies and gentlemen, thank you for standing by. Welcome to the Hansen Natural Corporation first quarter 2010 financial results conference call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions)

This conference is being recorded today, Thursday, May 6, 2010. I would now like to turn the conference over to our host, Mr. Rodney Sacks, Chairman and Chief Executive Officer. Please go ahead, sir.

Rodney Sacks

Good afternoon, ladies and gentlemen. Thank you for attending this call. I am Rodney Sacks. Hilton Schlosberg, our vice chairman and president, is with me today, as is Tom Kelly, our vice president of finance.

Before we begin, I'd like to remind listeners that certain statements made during this call may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and which are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance, and trends.

Management cautions that these statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside the control of the company and that may cause actual results to differ materially from the forward-looking statements made herein.

Please refer to our filings with the Securities and Exchange Commission including our most recent annual report on Form 10-K filed on March 1, 2010, and our most recent quarterly reports on Form 10-Q, including the sections contained therein entitled risk factors and forward-looking statements for discussion on specific risks and uncertainties that may affect our performance. The company assumes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.

An explanation of the non-GAAP measures for gross sales and certain expenditures which may be mentioned during the course of this call is provided in the notes designated with asterisks in the condensed consolidated statements of income and other information attached to the earnings release dated May 6, 2010. A copy of this information is also available on our website, www.hansens.com in the investor relations section.

Although the beverage market in general continued to show softness through the first quarter of 2010, particularly in North America, the energy drink category inclusive of energy shots continued to experience increases in sales. According to Nielsen for the 13 weeks through April 24, 2010, all outlets combined, namely convenience, grocery, drug, and mass merchandisers, excluding Wal-Mart, sales in the energy drink category including shots increased 7.5% versus the same period a year ago.

Sales of Monster grew 8.8% in the 13-week period concerned while sales of Red Bull increased by 13.3%. Sales of Rockstar increased 3.1%, sales of Amp dropped 9.5%, sales of NOS increased 8.5%, and sales of Full Throttle dropped 21.1%. According to the Nielsen report for the four weeks ending April 24, 2010, sales of energy drinks in the convenience and gas channel increased by 5.6% over the comparable four-week period in 2009.

Over this period, sales of Monster increased by 7.1% over last year, while sales of Red Bull increased by 11.7% over last year. Rockstar was up 1.8%, while Amp was down 13.4%. Full Throttle was down 28.8%. No Fear was down 39.2%, while SoBe and Adrenaline Rush were down in excess of [90%]. NOS was up by 1.8%.

According to Nielsen, for the four weeks ended April 24, 2010, Monster's market share of the convenience and gas channel of the energy drink category including energy shots was 27.7% against Red Bull's share of 31.8% and Rockstar's share of 9.6%. In actual dollars, sales in the energy drink category for all outlets combined increased by $91.6 million to $1.3 billion in the 13 weeks ended April 24, 2010.

According to Nielsen, sales of Monster increased by $27.6 million as compared to sales of Red Bull which increased by $50.1 million. Sales of Rockstar increased by $3.9 million and, sales of Amp decreased by $8.2 million. Sales of NOS increased by $3.5 million, while sales of Full Throttle dropped by $10.4 million. We continue to address the markets in the United States in which Monster has experienced weakness with a view to recovering market share.

According to Nielsen, sales of Java Monster represented approximately 12.3% of the sales of the Monster brand for the 13 weeks to April 24, 2010, which is a decrease of 1.2 percentage points as compared to 13.5% for the same period last year. The decline in the sales of Java Monster continues to be attributable primarily to the entry of Starbucks into the category in the middle of the second quarter of 2008 with its new line of Doubleshot Energy Plus coffee drinks in 15-ounce cans which compete directly with Java Monster.

We are, however, seeing increased sales of Loca Moca and Mean Bean, which are the primary packages of our Java Monster line over the comparable 13-week period last year. In the 13 weeks ended April 24, 2010, for all outlets combined, sales of the ready-to-drink coffee drinks and energy plus coffee drinks increased 2.1% over the same period last year. Java Monster is 0.6% lower than last year. Starbucks Doubleshot Energy is up 24.1. Rockstar Roasted is down 17.8%, and Full Throttle coffee is down 52.9%.

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