Anheuser-Busch InBev SA/NV

Welcome to AB InBev's third quarter 2025 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michelle 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 AAB embeds 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 the 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 Exchange Commission on March 12th, 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. Michel de Caris. Sir, you may begin.

Thank you, and welcome, everyone, to our third quarter 2025 earnings call. It is 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. In the third quarter, we continue to navigate a dynamic operating environment with headwinds in China and unseasonable weather in the Americas, particularly in Brazil, constraining our results. After a slow start to the quarter in July and August, we saw improved performance in September. We remain focused on the consistent execution of our strategy and adapted where required. We maintained our disciplined revenue management plan and continued to deliver on our productivity initiatives. Consistent investments in our brands and innovations drove increased portfolio brand power and continued market share gains in key markets. Despite the challenging environment, we delivered another quarter of top and bottom line growth, margin expansion, and U.S. dollar EPS growth. Our growth platforms of premium beer, non-alcohol beer, and beyond beer continue to outperform, and the quarterly GMV of beers marketplace has reached nearly $1 billion. In the U.S., our portfolio is continuing to build momentum and gain share of the industry, led by Michelob Ultra, which is now the number one brand in the industry by volume, year to date. Our solid financial results in the first nine months of the year reinforce our confidence in delivering our outlook for the year. Given our leveraged progress and strong free cash flow generation, the board has approved a $6 billion share buyback program to be executed within the next 24 months, as well as an interim dividend of 15 euro cents per share. We also continue to proactively manage our debt portfolio and have announced the redemption of $2 billion of outstanding bonds. In summary, we are confident in the resilience of our strategy and ability to deliver consistent results. We are investing to provide superior value to our consumers, and we are winning in key markets and growth segments. We are taking action where adjustments are required and are excited about the opportunities ahead to drive shareholder value creation through profitable growth and discipline capital location decisions. Turning to our operating performance. While overall volumes were below potential, we grew revenue in 70% of our markets. The combination of our discipline revenue management choices and portfolio of mega brands that command the premium price, drove a revenue per hectolitre increase of 4.8%, resulting in top-line growth of 0.9%. Our productivity initiatives more than offset transactional effects headwinds to drive an EBITDA increase of 3.3%, with margin expansion of 85 bps. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver profitable growth in the long term. Revenue increased in 70% of our markets this quarter, and we delivered bottom line growth in four of our five operating regions. 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 momentum of our portfolio continued, and we are increasing investments in our brands to fuel growth. In Beyond Beer, our portfolio growth accelerated, with a revenue increase in the mid-40s, led by Cutwater, which grew revenue in the triple digits. Cutwater is now one of the top 10 largest spirits brands in the U.S. and was the number one share gainer brand in the total spirits industry in August and September. And in beer, our market share momentum was led by Nickelob Ultra, the number one volume share gainer in the industry, and now the largest brand year to date in both on and off-premise channels. Ultra has gained market share in all 50 states this quarter. The brand has 16% share of the industry in its top state, and 8% average share nationally, but has less than 6% share of the industry in training states. So there remains a significant opportunity for further expansion and growth. Michelob UltraZero was launched early this year and is already the second largest non-alcohol beer brand and the number one fastest growing non-alcohol beer in the industry. Ultra is the superior light beer, made for those who seek an active lifestyle and balanced choices. Now, let's turn to middle Americas. In Mexico, our revenue continued to grow, driven by disciplined revenue management choices. The industry was, however, impacted by a softer consumer environment and unseasonable weather, which resulted in our volumes declining by low single digits. With improved weather and consumer sentiment, our volumes improved sequentially throughout the quarter, gaining share and returning to growth in August and September. In Colombia, record high volumes drove low-teens top-line and mid-single-digits bottom-line growth, with our portfolio estimated to have gained share of total alcohol beverages. In Brazil, market share gain and disciplined revenue in cost management offset a soft industry to deliver flat EBITDA with margin expansion. Our revenue declined by 1.9%, driven by volume performance, which was negatively impacted by unseasonable weather and a softer consumer environment. When we look at our performance across both South America and Middle Americas, It is clear that the industry has been impacted by a combination of cyclical and one-off factors this quarter. Cyclical factors include inflationary pressures and low consumer sentiment, which have impacted demand not only for beer, but all consumer categories to different degrees. What has perhaps been more acute for beer than other categories has been the unseasonable weather. Latin America accounts for 20% of the global beer volume, which is typically 1.5 to 2 times the weight of other categories in the consumer goods area. And the region is even more relevant for our business. While we are managing through the short-term headwinds, when we look ahead at the outlook for the category, the fundamental drivers are unchanged, and we see clear potential for industry volume growth as conditions normalize, as evidenced by Mexico, where our volumes returned to growth in August and September. In Europe, continued market share gains and premiumization drove flatish volumes and margin recovery. We gained share of the industry in five of our six key markets, with our performance driven by our mega brands and non-alcohol beer. In South Africa, the underlying momentum of our business continued, maintaining share of beer and gaining share of beyond beer. Top line grew by mid-single digits, and EBITDA grew by high single digits with margin expansion. Now, moving to APEC. In China, revenue declined by 15.2%, with our volumes underperforming the industry. While the overall industry has been impacted by a soft consumer environment, which has been even more pronounced in our footprint and key channels, we recognize that we have opportunities to enhance our execution and roll to market to better align our results with our capabilities. We are a company of owners who strive for operational excellence. We have been working in China to right-size inventories in line with the channel shifts. allocate resources towards areas of growth, and elevate our execution. We have a clear view of where to improve, and as we move forward, our priority is to reignite growth and rebuild our momentum. To achieve this, we are focused on increasing investments in our mega brands, leading innovation within the industry across packaging and liquids, strengthening our route to market in the in-home channels, with an increased focus on online to offline, continuing our geographic expansion and rebuilding our excellence in execution. We are moving with speed to ensure that our business emerges stronger and investing to be better positioned to outperform in the long term. Now, let's take a look at the key highlights of our three strategic pillars. starting with leading and growing the category. Our mega brands continue to lead our growth, with net revenue increasing by 3%. Corona continue to drive premiumization across our markets, growing revenue by 6.3% outside of Mexico and growing volumes by double digits in 33 markets. Through the consistent execution of our category expansion levers, We aim to increase participation across our markets by offering superior core brands, innovating in balanced choices to provide consumers with no and low alcohol, low carb, zero sugar, and gluten-free options, and expanding our premium and beyond beer portfolios. On a roll in 12 months, participation of legal drinking age consumers within our portfolio was stable. In non-alcohol beer, our portfolio momentum continued, with net revenue growing by 27%, led by the growth of Corona Zero. We are now leaders in eight of our top 14 non-alcohol beer markets, and estimate to have gained share in 70% of them. Non-alcohol beer is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth. This quarter, we announced the partnership with Netflix, which is the world's most popular streaming service. They are creating content that shapes culture, and watching Netflix has become a new social occasion. Our iconic brands are part of the fabric of society in the markets in which we operate. And it is perfect pairing to bring together beer and entertainment in this unprecedented way. What makes our partnership with Netflix unique is its global reach and scale of activations across our portfolio of brands. Consumers receive this come to life through co-marketing campaigns. activations, title integration, limited edition packaging, and even at live events. But what we are most excited about is how this partnership will create more meaningful experiences for consumers across their passion points, including comedy, music, cooking, and live sport events. The beer and beyond beer category remains vibrant, and we are leading innovation to address emerging consumer needs, providing choice and superior value in different occasions. In balanced choices, we are innovating liquids to provide consumers with different options to meet different lifestyles. From the rollout of Stella Gluten-Free in Brazil, to Harbin Zero Sugar in China, to Michelob Ultra Zero in the U.S., and CAS 4.0 in South Korea. We are leading the category in liquid innovation. In Beyond Beer, cat water continues to expand, growing volumes by triple digits, approaching half billion dollars in analyzed retail sales, and is now a top 10 spirits brand in the U.S. And after a successful rollout in Africa, Our flavor beer flying fish is now expanding to Europe and the Americas. In adjacent beverage categories, we are taking the learnings from developing a number of successful brands in the energy drink space in the U.S. and have launched Form Energy to participate directly in this segment. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In the second quarter, BIS captured $13.3 billion in gross merchandising value, an 11% increase versus last year. The growth of BIS marketplace accelerated with more than 500 partners on the platform. Quarterly GMV increased by 66% versus last year and now approaching $1 billion. And in D2C, our digital platforms continue to enable a one-to-one connection with our consumers and help us in developing new occasions. Our digital platforms generated $138 million in revenue, serving 11.9 million consumers and generating close to 18 million orders online. 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 will take a few minutes to discuss the progress we have made in optimizing our business. Our EBITDA margins improved by 85 basis points this quarter, with expansion in four of our five operating regions. We know that each quarter will be different. But we are confident that the combination of our leadership advantages, discipline revenue management, continued premiumization, and efficient operating model create an opportunity for further margin expansion over time. Moving on to EPS. We deliver underlying EPS of 99 cents per share. a 1% increase in US dollars, and a 0.3% increase in constant currency versus last year. EBITDA growth accounted for a 9 cents per share increase, partially offset by higher other financial results, which increased due to a higher cost of FX movements and cost of hedging. The objective of our capital allocation framework is to maximize value creation for our shareholders given the progress we have made on our the leveraging and our solid year-to-date financial results we have increased flexibility on our capital location choices we remain confident in the long-term growth and value of our business and have announced today a new $6 billion share buyback program to be executed within the next 24 months. In addition, we have announced an interim dividend of 15 euro cents per share, our first interim dividend since 2019. We also continue to proactively manage our debt portfolio and have announced a bond redemption of $2 billion. Our bond portfolio remain well distributed with no relevant near and medium-term refinancing needs. Upon completion of the bond redemption announced today, we will have no bonds maturing through 2026, and we have no financial problems. Our results in the first nine months of the year, the resilience of our strategy, and the strength of our mega brands all reinforce our confidence in our ability to deliver on our 2025 outlook of 48% EBITDA growth. With that, I would like to hand it back to Michel for some final comments.