Hansen's Shareholder's Meeting - November 11, 2005

Discussion follows the photos


The contents of the goodie bag



The office space in center


Trucks loading to the left


Trailers loading to the right


The motorcycle helmet display in the lobby


The boardroom, with Rodney front and center



The Fizzit display


The full range product display


The Monster cooler


The world record motorcycle jump time-lapse


Discussion

The Hansen’s facility is a warehouse type building with an office building attached in the front and center. The warehouse portion is much wider and sticks out on both sides of the office building. There are loading docks also on both sides. When I was there it looked like all of the docks were occupied with the eastern half being actively loaded. It appeared that the loaders and truck drivers were scrambling. The western half had no tractors to go with the trailers and did not appear as busy.

When I walked in, there was no big hubbub. I was ten minutes late due to the wonderful OC traffic. I was told by the receptionist that the meeting was upstairs and to the left. I was allowed to try to find it unescorted. Well, it had already started so the doors were shut and I just walked right past. A helpful employee found me wandering and showed me where to go.

23 shareholders present when I arrived, probably 2-3 came in after me.

The conference room was on the second floor of the building and shared a wall with the warehouse area behind. I heard the same truck horn and engine noises as can be heard in the conference calls!!

There was a stack of Fizzit (check out the website) to Rodney’s left in the corner. Opposite Rodney there was a half size cooler of Monster and paraphernalia. In the back corner of the room, there was another display that showed nearly the entire range of products.

For the most part Rodney made a similar discussion to what can be heard on the most recent conference call. There really was no new news to me during his presentation. His presentation was real good. He went one for about 35 minutes non-stop without looking at any notes. I suppose the CC was a good dress rehearsal. He had an 8 oz. Lo-Carb Monster in hand which explains his ability to keep going and going.

Rodney mentioned the world record moto jump they recently sponsored. He passed around a time lapse photo of the jump. Impressive.

For anyone who has been diligently following the stock, the better info came from the Q & A. Some interesting tidbits that I recorded:

Swire, the independent Coke distributor in the western USA, and the Philly Coke distributors have chosen not to follow the Coke path and are distributing Monster instead of Rockstar. Swire recently chose Monster, as mentioned in the conference call. Rodney says they made that decision after looking at the sales and evaluating the products themselves. Both distribute Full Throttle but not Rockstar.

Vending – Rodney says that they are not taking on vending directly because it takes too much manpower and it is smarter to let the experienced distributors handle that. The Swire and Dr. Pepper distributors were specifically mentioned to be putting Monster into machines. In some cases HANS is funding/supporting the conversion of vending machines to have a Monster front panel and to contain Monster.

HANS turned down the opportunity to produce a Von Dutch branded energy drink. For comparison Rodney says that the Von Dutch brand does not carry the credibility or coolness that Lost does. He also said they thought it was an inferior product. I wonder if the folks making the Von Dutch pitch chose Rockstar only after they were unsuccessful with HANS. One would assume that Von Dutch would have only been looking for one company to license to.

Rodney said that Coke will continue to put random energy drinks on the market. Since the profit margins are high, Coke can afford to just put product out there and see what sticks. Strategically, this is weak because they will not take the effort to specifically develop a good flagship product and may be left with a portfolio of inferior drinks. In the long run Coke could be shut out by strong high quality drinks such as Monster. Along these lines, he said that Rockstar is strong in some regions and weak in others.

With regards to the new Mountain Dew MDX, he said that it looks like a soda and is not commanding the same price or profit margin as the more established energy drinks. I agree with that. In fact, careful comparison of the labels of MDX with any leading canned energy drink shows you that the MDX will not be as effective as an energy supplement. The FDA mandated section on MDX is labeled, “Nutrition Facts” wheras Monster is labeled “Supplement Facts.” So Monster has the ingredients that will really give you energy, and MDX does not. There are reports from the field that the MDX distributors are using a suction cup rack to place MDX in front of Monster in the C-store coolers. The Monster distributors are working against this when it is found.

He very seriously stated that the Hansen’s soda lines are not being ignored. He said that all soda companies are having a little bit of trouble right now ant that they are no exception. They are actively working to improve the situation.

Reiterating what we’ve heard before, he said their philosophy is to use the cash for strategic acquisitions and that they have no specific timetable. He said timing such an acquisition properly is important and therefore they cannot predict when such an event would occur. They would be looking for something that would tie in closely and support the existing product base.

To trade options, the company would need a sponsor to make the market. They do not seem to concern themselves with this but do not seem to be opposed to the possibility. They are not engaged in the activity of trying to find a sponsor for options.

Commenting on Greenberg, Rodney called his writing illogical and spurious. I agree.

They speculate that Fidelity may have encouraged the Citibank analyst to take a look at HANS. It sounds like the analyst has had lots of interaction with HANS management and is respected. The analyst supposedly has made a name for himself covering natural foods type companies.

7up is distributing Lost 5-0 so it will get good distribution support and it is being targeted in the midwest.

There were 83 “registered” conference call listeners. I suppose that means institutions. I know that that is not the number of internet listeners. Hopefully someone can comment about who has to register to listen. Hilton expressed a great deal of surprise that the number was that high.

They gave out nice goodie bags full of Monster, Lost, Hansen's, and Fizzit.