Anheuser-Busch InBev SA/NV

Welcome to AB InBev's first quarter 2025 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michelle Gutierrez, Chief Executive Officer, and Mr. Fernando Tannenbaum, 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 and Reports and Reports Centers 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'd like to ask a question at that time, please press Star 1 on your touchstone phone. If at any point your question has been answered, you may remove yourself by pressing Q and the pound key. 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 a discussion of some of the risks and important factors that can, in fact, affect AB InBev's future results, see risk factors in the company's latest annual report on Form 20F filed with the Securities and Exchange Commission on March 12, 2025. 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 Dukaris. Thank you. You may begin.

Thank you and welcome everyone to our first quarter 2025 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities this quarter. After that, we'll be happy to answer your questions. Let's start with the key highlights. The global momentum of our business continued with the consistent execution of our strategy, delivering another quarter of reliable growth. EBITDA grew by 7.9% at the top end of our outlook range with continued margin expansion. In the U.S., our portfolio is building momentum and has reached an inflection point, and we are increasing investments in our brands to fuel this momentum. Our no-alcohol beer portfolio continued to outperform globally, increasing revenues by 34%. Beer's marketplace continued to scale, increasing GMV by 53% versus last year to reach US$645 million. And the ongoing optimization of our business drove a 7% increase in underlying US dollar EPS, with 20% growth in constant currency terms. Turning to our operating performance, our overall volume performance was impacted by calendar-related factors, such as cycling the leap year and the later timing of Easter, resulting in a volume decline of 2.2%. We estimate these technical calendar shifts accounted for a majority of our volume decline this quarter. Despite these technical factors impacting volume, our revenue increased by 1.5%, as the strength of our brand's portfolio and ongoing premiumization drove a revenue per hectolitre increase of 3.7%. Our diversified geographic footprint enables us to deliver consistent results and has us well-placed to drive long-term value creation. Revenue increased in approximately 50% of our markets. And double-digit bottom line growth in the Middle Americas, South America, Africa, and Europe drove overall EBITDA at the top end of our outlook. 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., our portfolio is building momentum and has reached an inflection point, and we are increasing investments in our brands to fuel growth. We gained volume market share of both the beer industry and spirits-based ready-to-drink category. In beer, Michelob Ultra and Bush Light were the top two volume share gainers in the industry for the second quarter in a row. And in spirits-based RTDs, our portfolio grew volumes by strong double digits, led by cut water and neutral. While our portfolio continued to gain share, adverse weather and the later time of Easter impacted the overall industry performance in the first quarter. I thought it would be helpful to bring some data to the conversation so that we can look at it together. According to Sercana, off-premise sales to consumer volumes declined by 4.7% and dollar sales by 2.9% versus the historical range of around 1% to 2% in volumes and flattish dollar sales. When we disaggregate the industry growth On a week-by-week basis, our analysis indicates that the majority of the underperformance this quarter was driven by adverse weather and the later time of Easter. When we look to April, we are encouraged that the industry has improved, with better weather and the Easter shift contributing to volumes aligning more closely with the historical trends. The summer season is an important period for the beer industry, and we look forward to building on the momentum of our portfolio and activating the category through our mega platforms. Now, moving to Middle Americas. In Mexico, the underlying industry momentum continued, with our business delivering mid-single-digit revenue growth and double-digit EBITDA growth. volumes declined by low single digits in line with the industry, which was impacted by calendar-related factors. In Colombia, record high volumes and margin expansion drove double-digit EBITDA growth. In South America, our business in Brazil delivered record high volumes for both beer and non-beer. Total volumes increased by 1.4%, with continued margin expansion driving double-digit bottom-line growth. In Europe, continued premiumization of our portfolio and further margin recovery drove double-digit EBITDA growth. Our premium and super-premium brands contributed 60% of our revenue this quarter, with performance led by Corona and Stella Artois. In South Africa, the underlying momentum of our business continued, gaining share of both beer and beyond beer. Revenue and EBITDA grew by low single digits, with our performance driven by our premium and super premium brands, which grew volumes by low things. In China, the industry improved sequentially. However, we underperformed. primarily driven by softness in our key regions and the on-trade channel. We remain confident in our strategy and we are focused on strengthening our execution by increasing discipline and excellence in our road to market, increasing investments in our mega brands, accelerating our expansion in the in-home channel and scaling up key innovations such as harboring zero sugar. Now, let's look at the key highlights of our three strategic pillars, starting with leading and growing the category. We have evolved our portfolio management approach to focus our investments in our mega brands to drive efficient, profitable growth. We have around 50 mega brands globally, typically five per market. And these brands continue to lead our growth, with net revenue increasing by 4.4%. Our global mega brand, Corona, continues to drive premiumization across our markets, growing revenue by 11.2% outside of Mexico. 2025 marks the 100th year anniversary since Corona's launch, and we just kicked off the celebration with an event on Copacabana Beach with over 2 million fans in attendance. We are looking forward to execute a strong lineup of activations around the world throughout the entire year in recognition of the heritage, premiumness, and quality of the brand. This quarter, Corona volumes grew by double digits in over 30 markets globally. In its home market of Mexico, Corona is the number one brand, and volumes grew by mid-single digits. The brand power and consumer preference for Corona has earned the right for a premium price point. Corona sells on average at 20% premium to the nearest competitor. And to crown its 100-year anniversary, Corona was again named the most valuable beer brand in the world in 2025. Through the consistent execution of our category expansion levers, we are increasing category participation across our markets by offering superior core brands, innovating in balanced choices to provide consumers with low and low alcohol, low carb, zero sugar, and gluten-free options, and expanding our premium and beyond beer portfolios. As a result, on a rolling 12-month basis, participation of legal drinking age consumers with our portfolio increased by 60 base points across our key markets, the equivalent of adding 6 million new consumers to our ecosystem. In non-alcohol beer, our portfolio momentum continues to accelerate, with volumes growing by 34%, led by the triple-digit growth of Corona Zero. While non-alcohol beer is currently a relatively small portion of our global volume, we are leaders in more than 50% of our key non-alcohol markets, and estimate we gain its share in 75% of them. With 65% of the volume coming from new consumers and new occasions, we believe non-alcohol beer is a key opportunity to develop the category and drive incremental volume growth. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In the first quarter, beef captured $11.6 billion in GMV, a 10% increase versus last year, with 32 million orders transacted through the platform. Biz marketplace continues to scale, with GMV increasing by 63% versus last year, to reach $645 million. In DTC, our digital platforms are enabling a one-to-one connection with our consumers and the development of new consumption locations. Our digital platforms generated 19.2 million orders with revenue increasing by 12% to reach $117 million. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Thank you, Michel. Good morning. Good afternoon, everyone. I'll take a few minutes to discuss the progress we have made in optimizing our businesses. Our EBITDA margins improved by 218 base points this quarter, with expansion in four of our five operating regions. We know that each year will be different, but we are confident the combination of our leadership advantages, disciplined revenue management, continued premiumization, An efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. We delivered underlying EPS of 81 cents per share, a 7.1% increase in U.S. dollars and a 20.2% increase in constant currency versus last year. Organic EBITDA growth accounted for a 16 cents per share increase with translation effects in $0.09 per share headwind. Lower net interest expense and the optimization of other below EBITDA items, such as costs of hedging and effects losses drove the balance of our EPS growth. Let me take a moment to talk about our operations. Our business is local. We procure, produce, distribute and sell locally. In fact, more than 98% of the volumes we sell are locally produced. If we look specifically at the US as an example, we have 18 breweries, over 700 American farmers, and over 7,000 local suppliers, with 99% of our volumes locally produced. As a result, we have limited direct exposure to tariffs. Our results in the first quarter, the resilience of the beer category, the strength of our mega brands, and the continued momentum of our businesses all reinforce our confidence in our ability to deliver on our 2025 outlook of 4% to 8% EBITDA growth. With that, I would like to hand it back to Michel for some final comments before we start our Q&A session.