Anheuser-Busch InBev SA/NV

Welcome to Anheuser-Busch InBev's first quarter 2022 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michelle Dukaris, Chief Executive Officer, and Mr. Fernando Tenenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab in the Reports and Results Center page. Today's webcast will be available for on-demand playback later today. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. If anyone should require operator assistance, please press star 0. Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of these risks and important factors that could affect AB InBev's future results, see Risk Factors in the company's latest annual report on Form 20-S, filed with the Securities and Exchange Commission on the 18th of March, 2022. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michel Doukeres. Sir, you may begin.

Thank you, Jessie, and welcome everyone to our first quarter 2022 earnings call. It is a pleasure to be speaking with you all today. First, I would like to take a moment to share our deepest sympathies to all of those who have been affected by the situation in Ukraine and acknowledge the commitment and dedication of our teams in supporting our joint venture colleagues and their families while wishing for peace. Today, Fernanda and I will take you through our first quarter operating highlights. and provide you with an update on the progress we have made in the execution of our strategic priorities. We'll then be happy to answer your questions. So let's start with our operating performance. Our business momentum continues this quarter, and we are very pleased with our performance to start the year. We delivered top-line growth of 11.1%, with 2.8% volume growth. Revenue per hectolitre grew 7.8%, driven by the implementation of pricing actions across our markets and enhanced by ongoing criminalization and continued recovery of the on-premise channel. EBITDA increased by 7.4%, as we managed anticipated commodity cost headwinds and elevated supply chain costs. We delivered normalized EPS of $0.67 and underlying EPS of $0.60. Now, I would like to share some highlights from our key markets. Our business in the US delivered continued top line growth, driven by consistent execution of our commercial strategy and the rebalancing of our portfolio, despite a soft industry. Our above-court portfolio continues to outperform, led by Michelob Ultra, which grew volumes by double digits. Within this third-based ready-to-drink segment, our portfolio continues to grow ahead of the industry, led by Cutwater. In Mexico, we continued our momentum, delivering double-digit top- and bottom-line growth. We grew volumes across all segments of our portfolio, resulting in further market share expansion. Our above-court portfolio increased by double digits, led by Modelo Family and Michelob Ultra. In Colombia, we delivered double-digit top and bottom-line growth and continued to grow the beer category through the implementation of our expansion levers, resulting in a new record high per capita consumption this quarter. With our road to market now digitized, 30% of biz customers are also biz marketplace users. Our business in Brazil delivered double digit top line growth. Our beer volumes once again outperformed the industry, growing by 2.1%, despite lapping a strong comparable. With our road to market digitized, Over 60% of these customers are now these marketplace users. In Europe, we grew top and bottom line by double digits, driven by volume growth, on-premise reopening, and supported by revenue management initiatives. Our premium and super premium portfolio led the way, growing revenues by mid-teens, representing now over 50% of our total revenue. In South Africa, we continued our momentum, delivering above 30% top-line growth with volume increasing in the mid-20s, ahead of the industry. All segments of our portfolio grew this quarter, led by over 40% growth in our leading core brand, Carlin Black Label. Driven by this, our road to market is now digitized, with almost 90% of our revenues coming through digital channels. In China, momentum continued into the start of the year, marked by a strong Chinese New Year. However, the implementation of COVID-19 restrictions in March led to a total industry decline of low single digits in the quarter, according to our estimates. These restrictions This proportionally impacted our key regions and channels, leading to top-line decline of 1.2%. Notwithstanding the restrictions, underlying consumer demand for premium products remained strong, and the share of our total volume generated by our premium portfolio increased. I would like now to turn your attention to a few ESG highlights. In the first quarter, we made progress across our ESG priorities with select highlights including recognition of our strong sustainability track record, ambitious commitments, and our focused ESG strategy. We have been awarded the Gold Medal for International Corporate Achievement in Sustainable Development by the World Environment Center. Advancing water stewardship We published a watershed health guide in partnership with the Nature Conservancy to share learnings and catalyze action in driving measurable watershed outcomes. And fostering entrepreneurship. We have launched applications for the fourth cohort of our award-winning 100-plus accelerator program. Founded in 2018, the 100-plus accelerator identifies and scales sustainable innovations focused on solving key challenges within our ESG priorities. Now, let's focus on our strategic pillars. To enable the execution of our strategy, we have announced a newly aligned commercial leadership structure, designed to accelerate the next phase of innovation and growth at AB InBev. with the creation of the chief growth officer position. Under Ricardo Tadeu's leadership, this new structure will maximize data and digital integration with our marketing and sales capabilities. We are also taking further steps to empower our teams locally. The titles of each of our six zone presidents have been updated to regional CEO. to better reflect the scope and impact of these key positions. Next, let's turn to pillar one of our strategy, lead and grow the category. Driven by the execution of our category expansion model, this quarter we grew volumes in more than two-thirds of our markets. Let me take you through our category expansion levers. First, we continue to focus on making the beer category inclusive for all consumers. Following the successful expansion of Coronita, our smaller bottle pack offering for Corona, we introduced further smaller pack formats in several key markets in Latin America to provide consumers with price points and choice for consumption needs in different occasions. Second, we are offering superior core propositions. Our mainstream portfolio delivered high single-digit revenue growth in this quarter. Once again, outperformed the industry across most of our key markets. Third, occasions development. Estelle Artois, our leading brand in the news occasion, grew by over 14% globally this quarter. with the planned expansion of our Sign Off, Dine, Bon Appetit campaign to a further seven markets this year. In the non-alcoholic beer category, our portfolio delivered continued revenue growth, led by liquid and pack innovations, such as Corona Sun Brew that we launched in Canada. Fourth, we are leading in premiumization. This quarter, our above-court portfolio delivered over 15% revenue growth, led by Nickelob Ultra, which is now available in 14 markets and grew by double digits. Our global brands continue to lead premiumization across our markets. The combined revenues of Budweiser, Estelle Artois, and Corona grew by 6% outside of the brand's home markets. led by Corona with 14.1% and Stella Artois with 11.5% growth. Budweiser grew by 0.3%, impacted by the renewed COVID-19 restrictions in China. Finally, we continue to expand the category with our Beyond Beer offerings. Our global Beyond Beer business contributed over $350 million in revenue this quarter. led by the US, where cut water grew by strong double digits, and South Africa, where brutal fruit and flying fish delivered continued double-digit growth. Innovation this quarter supported category expansion across each of the five levels, contributing approximately 8% of our total revenue. Highlights include expanding our superior core propositions with the launch of Budweiser Supreme in the US, the release of Stella Artois Unfiltered in the UK, and the launch of Corona Tropical across some of our key markets. In the UK, we leveraged our direct consumer solution, Perfect Draft, to exclusively release Stella Artois Unfiltered through the e-commerce channel. Based on the positive consumer feedback and insights from the launch, we are now expanding the brand into other channels and packages. Now, let's turn to our second strategic pillar, digitize and monetize our ecosystem. As we continue to invest to become a tech-first FMCG company, this continues to see remarkable acceleration in usage and reach. capturing approximately US$6.5 billion in gross merchandising value in the first quarter, up from approximately US$3.5 billion in the first quarter of 2021. We are now live in 17 countries with 2.7 million monthly active users. In 11 of our 17 countries, Our customers are also able to manage their orders for third-party products through this marketplace. We know that for many of our customers, Beer typically makes up less than 25% of their store sales. This marketplace offers a consolidated order and delivery management platform, solving pain points and empowering our customers. As of the first quarter, we have seen increased adoption and exponential growth, as 31% of Biz customers are now users of Biz Marketplace, with annualized revenues of $800 million. Our partners are also benefiting from the digitalization of sales, with increased retailer engagement, distribution reach, and cost efficiencies. We are still in the early stages of exploring the possibilities, and we are excited by the results and feedback from our customers and partners. Now, let's talk about direct-to-consumer business. This quarter, our D2C products generated nearly US$300 million in revenues across 20 countries. The number of online orders grew by double digits versus last year. surpassing 17 million transactions. In Latin America, Zed delivery is already present in approximately 300 cities in Brazil, covering about 50% of the country's population. Revenue from Zed delivery grew almost 30% year-on-year. Based on the success of Zain Brazil, we are scaling the courier product to another 10 countries in Latin America. We continue to deliver on our strategy with best-in-class creative marketing and innovation capabilities. Following the announcement that ABI was selected by CAN as the Creative Marketeer of the Year, we were recently named the first company world's most innovative companies, listed for the first time. Fast Company recognized ABI's ability to quickly seed and scale innovation to drive performance and impact. The award highlighted our beer innovations, tech products, and our biotech initiatives, evergreen. Big congratulations to our teams and partners. for this remarkable achievement and further recognition of how we are embedding creativity and innovation into our strategy. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimizing our business. Fernando.

Thank you, Michel. Good morning, good afternoon, everyone. We aim to maximize value by focusing on three areas. optimized resource allocation, robust risk management, and efficient capital structure. With respect to capital allocation, we aim to maximize long-term value by dynamically balancing our priorities. We continue to invest in organic growth and support our strategy to lead and grow the category and digitize and monetize our ecosystem. The excess cash generated by our business is then dynamically allocated to our other three capital allocation priorities, the leveraging, selective M&A, and return of capital to shareholders. In line with our capital allocation priorities, this quarter, we completed the redemption of US$3.1 billion of bonds, Our debt maturity profile remains well distributed with no near and medium term refinancing needs, with the weighted average maturity more than 16 years. Our debt portfolio does not have any financial covenants and is comprised of a variety of currencies diversifying our effects risk. In addition, approximately 93% of our bonds have a fixed rate. insulated from interest rate volatility and inflation, with an average coupon rate of approximately 4%. Our proactive revenue management, combined with our hedging policy and operational efficiency, contributed to 7.4% EBITDA growth and an increase in underlying EPS growing by $0.05 to $0.60 per share. I'll now hand it back to Michel for some final comments. Michel.