Anheuser-Busch InBev SA/NV

Welcome to AB InBev's third quarter 2024 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Rochelle DeCarris, 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 you 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 discussion of some of the risks and important factors that could affect AB InBev's future results see risk factors in the company's latest annual report on Form 20F filed with the Securities and Change Commission on March 11, 2024. 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. Michelle DeCarris. Sir, you may begin.

Thank you, and welcome, everyone, to our third quarter 2024 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our third quarter operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with our operating performance and the key highlights for the quarter. The global momentum of our business continued this quarter, with the consistent execution of our strategy delivering revenue growth in more than 60 percent of our markets, and overall EBITDA growth of 7.1 percent, with margin expansion of 169 basis points. Organic growth and the ongoing optimization of our business delivered another quarter of double-digit underlying dollar EPS growth. As a result of our performance in the first nine months of the year and our continued momentum, we are raising our full-year EBITDA outlook to 6% to 8%. In addition, we have announced that we will be proceeding with a US$2 billion share-by-back program to be executed within the next 12 months. While the operating environment remains dynamic in some of our markets, the strength of our global footprint, brand portfolio, and our focus on disciplined resource allocation are enabling us to invest for the long term while delivering efficient and profitable growth. Turning to our operating performance. Total revenue grew by 2.1% this quarter. with our revenue management choices and ongoing criminalization driving revenue per capita growth of 4.6%. Volumes increased in 50% of our markets. However, growth was offset by a soft consumer environment in China and Argentina, resulting in an overall volume decline of 2.4%. As we noted at our full year 23 results, For 2024, the definition of organic growth in Argentina has been amended to cap the price growth to a maximum of 26.8% year-over-year. We delivered broad-based growth this quarter with revenue increases in more than 60% of our markets and EBITDA growth and margin expansion in four of our five operating regions. Our diversified geographic footprint enables us to deliver consistent results and has us well-placed to drive superior long-term value creation. Now, I'll take a few minutes to walk you through the operational highlights for the quarter from our key regions, starting with North America. In the U.S., the beer industry remained resilient. improving in both volume and revenue trends quarter over quarter. Our beer portfolio gained volume share of the industry, driven by Michelob Ultra and Bush Light, which were two of the top three volume share gainers in the industry. Our improved market share trend and productivity initiatives drove EBITDA growth of 13.7%, with a margin improvement of approximately 375 basis points. Our business in the U.S. is regaining momentum, and we are continuing to invest to fuel the growth. Now, moving to Middle Americas. In Mexico, our volume has declined by low single digits, outperforming the industry, which was negatively impacted by adverse weather and a slower economic environment. Revenue was flattish, and EBITDA grew by mid-single digits with margin expansion. In Colombia, our business delivered high single-digit top line and double-digit bottom line growth with margin expansion. Beer volumes were flattish, while total volumes declined by low single digits as the industry was impacted by a week-long national trucking strike in September. Our premium and super premium brands led our performance, delivering high-teens volume growth. In South America, our business in Brazil delivered mid-single-digit top-line and double-digit bottom-line growth, with margin expansion of 174 basis points. Volume increased by 1.3%, led by our premium and super premium brands, which delivered volume growth in the low 20s. Now, let's talk about EMEA. In Europe, we grew bottom line by low single digits, with further margin recovery. Volumes declined by low single digits, estimated to have outperformed a soft industry in the majority of our markets. Our portfolio continues to premiumize, with our premium and super premium portfolio making up approximately 57% of our revenue. Performance was led by Corona, which delivered another quarter of double-digit volume growth. In South Africa, the momentum of our business continued, delivering double-digit top and bottom line growth with margin expansion. Volumes increased by low single digits with our performance driven by our above-court brands, which grew volumes by high teens, led by Corona and Stella Artois. And APAC. In China, a soft consumer environment continued to impact the overall beer industry and our performance, particularly from continued weakness in the on-premise channel. As a result, our revenue declined by 16.1% this quarter, While the industry has had a challenging nine months, we continue to focus on controlling what we can control. The consistent execution of our strategy, investing in our brands and digital capabilities to drive value for our customers and consumers, remaining disciplined with our cost and revenue management initiatives, and agile with our commercial investments. we remain confident that we are well positioned to capture the future growth opportunities given the consumer demand for our premium and super premium brands and our unwavering commitment to invest for the long term. Now, let's discuss our strategic pillars. Let's start with pillar one of our strategy, lead and grow the category. While our overall growth was constrained by performance in China, Our mega brands continue to lead our growth, increasing net revenue by 3.1%, led by Corona, which grew revenue by 10.2% outside of Mexico. With a more focused portfolio, we are disproportionately investing in our mega brands to increase our brand power and drive efficient growth. Through the consistent execution of our replicable growth drivers, and our five category expansion levers, we are leading and growing the category by offering superior corporate positions, developing new consumption occasions, and expanding our premium and beyond beer portfolios. As part of our strategy to lead and grow the category, we view the non-alcohol beer segment as a key opportunity to develop new beer consumption occasions. The Olympics Mega Platform provided us with a unique opportunity to activate Corona Zero at scale across more than 40 markets. We gained market share of non-alcohol beer in over 60% of our key markets in the third quarter, with Corona Zero more than doubling both volumes and revenues. While non-alcohol beer is currently a small portion of our global volume, We believe there is a significant opportunity for incremental growth, and we are committed to providing consumers with best-in-class liquids and brands to lead the development of the segment. Now, let's turn to our second strategic pillar, digitize and monetize our ecosystem. This continues to expand usage and reach. capturing approximately $12.1 billion in gross merchandising value, a 14% increase year-over-year, and reaching 3.9 million monthly active users. Customer satisfaction improved, with our net promoter score improving to plus 66. Biz Marketplace continued to grow, generating 9.5 million orders of non-ABI products and delivering $630 million in GMV this quarter, an increase of 51% versus last year. This is the equivalent of approximately $2.5 billion on an annualized basis. Now let's talk about our direct relationship with our consumers. Through our digital direct consumer platforms, we generated approximately 19 million unique orders and 11% revenue growth this quarter. That's 19 million data points to generate deep consumer insights, develop new consumption occasions, and drive incremental revenue for our business. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business. Fernando, it's over to you. Thank you, Michel. Good morning.

Good afternoon, everyone. First, let me share how we have progressed on some of our 2025 sustainability goals in the first nine months of 2024. In climate action, We continue to focus on reducing emissions across our operations globally. Our scopes 1 and 2 emissions per hectolitre of production have improved by 46% versus our 2017 baseline. In water stewardship, our water use efficiency ratio improved to 2.47 hectolitres per hectolitre year-to-date, versus 2.53 in the same period last year, as we continue working towards our ambition to reach 2.50 hectolitres per hectolitre on an annual basis by 2025. Moving to our financial performance, our EBITDA margin improved by 169 basis points this quarter, with margin expansions in four of our five operating regions. Our Leadership advantages, disciplined revenue management, continued premiumization, and efficient operating model create an opportunity for further margin expansion over time. Turning to our debt profile, you can see that our debt maturities remain well distributed with no relevant medium-term refinancing needs. We have approximately $3 billion worth of bonds maturing through 2026, a weighted average maturity of 14 years and no financial covenants. We delivered underlying EPS of $0.98 per share, a 14% increase versus last year. Organic EBITDA growth accounted for a $0.19 per share increase, which was mostly offset by translational FX headwinds. As we continue to optimize our business, improvements in below EBITDA items drove the balance of our EPS growth, such as lower net interest expense from active net debt management and continued leveraging, as well as lower costs of hedging and reduced FX losses. Given our continued progress on the leveraging, we have additional flexibility in our capital allocation choices. We remain disciplined with our capital allocation decisions, which we are dynamically balancing to maximize long-term value creation. We remain confident in the long-term growth of our business and have announced today that we will be proceeding with a $2 billion share-by-back program to be executed within the next 12 months. With that, I would like to hand it back to Michel for some final comments before we start our Q&A session. Michel?